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PEATTS'  DIGEST. 


THE  FULL  TEXT  OF   THE 

LAWS  RELAXma  TO  NATIONAL 

BANKS. 

WITH  EXPLANATORY   NOTES,  DIGEST  OF  DECISIONS  OF 

THE  COURTS  ON  THE  SEVERAL  SECTIONS,  INDEX 

OF    CASES    CITED    AND    RULINGS    OF    THE 

COMPTROLLER  OF  THE  CURRENCY. 


ALSO 

MOiTOGRAPHS  ON  THE   PRINCIPAL  SUBJECTS   RELATING  TO  NATIONAL 

BANKING,    REQUIREMENTS    AND    FORMS    OF    THE    OFFICE    OF 

COMPTROLLER  OF  THE  CURRENCY,  AND  MISCELLANEOUS 

REGULATIONS  OF  THE  UNITED  STATES  TREASURY 

DEPARTMENT  GOVERNING  BANKERS   IN 

THE  NATIONAL   SYSTEM.  ^ 


j6&ition  of  1905. 


•v-i         >i 


»       '!»»'> 


PREPARED  AND  PUBLISHED  BY 

A.    S.    PEATT   &   SOI^S, 

National  Bank  Agknts, 

WASHINGTON,    D.    C. 


¥ 


Entered  according  to  Act  of  Congress,  in  the  year  1905,  by 

A.   S.  PRATT  &  SONS, 

In  the  Office  of  the  Librarian  of  Congress,  at  Washington,  D,  C. 


PREFACE. 


This  work  was  first  published  in  the  early  days  of  the  National 
Banking  System,  and  then  merely  as  a  Digest  or  Brief  of  the 
ITational  Bank  Act.  Later,  the  application  of  the  Act  developed 
differences  of  opinion  as  to  the  meaning  and  effect  of  various  pro- 
visions, and  the  Courts  and  Comptroller  of  the  Currency  were  re- 
quired to  construe  them. 

For  this  reason  the  form  of  the  Digest  was  changed,  the  Bank 
Act  was  given  in  full,  and  under  each  section  a  digest  of  the  de- 
cisions of  the  Courts,  and  of  the  rulings  of  the  Comptroller. 
Further  additions  were  made  to  the  work,  consisting  of  sugges- 
tions on  organizing  a  National  bank,  and  regulations  of  the  Comp- 
troller's office,  the  U.  S.  Treasurer's  office  and  office  of  the  Secre- 
tary of  the  Treasury  in  their  several  relations  to  the  National 
banks. 

This  plan  of  the  book  has  been  followed  in  numerous  revisions, 
and  the  amendments  to  the  Bank  Act  and  additional  acts  passed 
by  Congress  given,  also  the  later  court  decisions  and  the  Comp- 
troller's rulings. 

Of  late  years  it  nas  been  evident,  on  account  of  the  amend- 
ments and  additional  acts  repealing  and  modifying  many  sections 
of  the  law,  that  it  was  necessary  the  work  should  be  recast  to  bring 
together  the  existing  statutes  bearing  on  the  same  subject,  and 
to  eliminate  obsolete  matter.  This  has  been  done  in  the  new  edi- 
tion of  the  work,  and  the  court  decisions  have  been  brought  down 
to  date. 

The  other  portion  of  the  work  also  has  been  greatly  enriched  by 
the  publishers,  and  their  long  experience  as  attorneys  for  National 
banks  before  the  Treasury  Department  has  qualified  them  for  this 

(ill) 


IV  PREFACE. 

work.  Important  subjects,  such  as  organization,  liquidation,  ex- 
tension of  charter  and  Government  depositaries,  have  been  treated 
in  monograph  form — and  the  requirements  as  to  reports,  reserve, 
tax,  five  per  cent,  fund,  bond  deposit,  transfers,  etc.,  are  given,  with 
explanatory  notes. 

The  great  importance  of  having  a  full  and  carefully  prepared 
general  index  has  been  recognized,  and  special  effort  made  to  have 
it  complete. 

There  is  also  given  a  Table  of  Cases  Cited,  an  index  of  the  sec- 
tions of  the  Eevised  Statutes  and  additional  Acts  governing  banking 
under  the  INTational  system,  and,  at  the  head  of  each  chapter,  an 
index  of  section  headings. 

This  edition  of  the  Digest  is  presented  to  the  public  in  con- 
fidence that  it  will  be  found  accurate,  clear  and  comprehensive, 
both  in  the  construction  of  the  law,  and  in  information  concerning 
the  organization,  conduct,  closing  or  extending  National  banks. 

The  compilation  of  the  Statutes,  and  the  digest  of  the  decisions 
of  the  Courts,  is  the  work  of  Mr.  John  J.  Crawford,  of  the  New 
York  Bar,  who  was,  in  1886-1888,  the  legal  counsel  to  the  Comp- 
troller of  the  Currency,  and  who  is  widely  known  as  the  drafts- 
man of  the  Negotiable  Instrument  Law,  and  a  recognized  au- 
thority on  Commercial  and  Banking  Law. 


CONTENTS. 


A  Table  of  Cases  Cited  and  an  Index  to  Sections  of  the 
Bevised  Statutes  follow  this  Table  of  Contents.  At  the  be- 
ginning of  each  Chapter  is  given  an  Index  of  Subjects 
covered  in  the  Chapter,  and  a  General  Index  is  given  at 
end  of  the  work. 


PART   I. 

THE  LAWS  RELATING  TO  NATIONAL  BANKS,  WITH  ANNOTATIONS. 

CHAPTER  FAGB 

I.  Office  of  Comptroller  of  the  Currency  or  Currency  Bureau. . .      1 

II.  Organization  and  Powers  of  National  Banks 7 

III.  Issue  and  Redemption  of  Circulating  Notes 77 

IV.  Regulations  of  the  Banking  Business 79 

V.  Taxation 133 

VI.     Dissolution  and  Receivership 150 

VII.     Crimes  and  Misdemeanors 176 

VIII.    Suits,  Jurisdiction,  and  Evidence 191 

PART   II. 

MONOGRAPHS.— The  Organization  and  Management  of  Na- 
tional Banks  ;  Extension  of  Corporate  Existence  ;  Voluntary 
Liquidation ;  Consolidation ;  Designation  as  Government 
Depositary. 

I,    Organization  of  National  Banks  de  novo. 

The  Subscription  Paper — Corporators— Articles  of  Asso- 
ciation—Organization Certificate — Sundry  Requirements 
to  Complete  Organization  and  Copies  of  Forms  Used 201 

Reorganization  of  State  or  Private  Bank  or  Co-partnership 223 

Conversion  of  an  Incorporated  State  Bank 226 

A  General  Form  of  By-Laws 232 

Suggestions  as  to  Management  of  National  Banks 238 

V 


VI  CONTENTS. 

CHAPTER  PAGB 

II.  Placing  National  Banks  in  Voluntary  Liquidation  and  Forms. .  246 

III.  Consolidation  of  National  Banks 253 

IV.  Extension  of  Corporate  Existence  and  Forms 257 

V.    Reorganization  versus  Extension 263 

VI.    National  Banks  as  Depositaries  of  Public  Moneys. 265 

*    PART  III. 

Reports  to  the  Comptroller  of  the  Currency  ;  Lawful  Money 
Reserve  ;  Five  Per  Cent.  Redemption  Fund  ;  Redemption 
and  Re-issue  of  Circulating  Notes;  Semi-annual  Tax  on 
Circulation  ;  Miscellaneous  Forms. 

I.    Report  of  Condition  of  Bank  ;   Forms  Used  ;  Explanation  of 

Items  ;    Instructions 272 

Report  of  Earnings  and  Dividends ;  Forms  Used  ;  Explanation 
of  Items ;    Instructions 288 

II.    Lawful  Money  Reserve ;  Regulations ;  Rules  for  Computing  ; 

Short  Methods  ;   Forms ;  Examples 294 

m.    Five  Per  Cent.  Redemption  Fund  ;  Transportation,  Redemp- 
tion and  Re-issue  of  Currency 309 

rV.    Tax  on  Circulating  Notes 315 

V.  Miscellaneous  Forms. — Certifying  the  Comptroller  of  the  Cur- 
rency Payment  on  Capital  Stock ;  Increase  or  Reduction  of 
Capital  and  other  Forms 319 

PART    IV. 

The  Issue  and  Redemption  of  U.  S.  Coin  and  Paper  Currency 
and  Transportation  ;  Transportation  of  National  Bank  Cir- 
culating Notes  ;  Miscellaneous  Regulations  as  tp  U.  S.  Bonds 
and  Treasury  Drafts. 

I.  The  Issue,  Redemption  and  Exchange  of  U.  S.  Coin  and  Paper 
Currency ;  Transportation  of,  and  of  National  Bank  Cir- 
culation   326 

II,  Miscellaneous  Regulations ;  U.  S.  Bonds,  Coupon  and  Regis- 
tered, Exchange,  Assignment,  Interest ;  Indorsement  of 
Treasury  Drafts,  etc 336 


TABLE  OF  CASES  CITED. 


Adams  v.  Nashville,  95  U.  S.,  19 

"  V.  Spokane  Drug  Co.,  57  Fed.  Rep.,  888 
Adair  v.  Robinson,  6  Tex.  Cir.  App.,  275  .  .  . 
Agnew  V.  U.  S.,  165  United  States,  36  ...  . 
Albion  Bank  v.  Montgomery,  54  Neb.,  681  .  .  . 
Albuquerque  N.  Bk.  v.  Perea,  147  U.  S.,  87  . 
Aldrich  v.  Chemical  National  Bank,  176  U.  S.,  618 

"       V.  Yates,  95  Fed.  Rep.,  78 

••  V.  Campbell,  97  Fed.  Rep.,  663  .  .  .  . 
Allen  V.  The  First  N.  Bk.  of  Xenia,  23  Ohio  St.,  97 
Anderson  v.  First  N.  Bk.  Grand  Forks,  5  N.  D.,  451 
V.  Line,  14  Fed.  Rep.,  405   .     .     .     . 


« 


«« 


M 


M 


V.  Philadelphia  Warehouse  Co.,  Ill  U.  S 
Armstrong  v.  Chemical  N.  Bk.,  41  Fed.  Rep.,  234 
"  V.  Chemical  N.  Bk.,  83  Fed.  Rep.,  556 

Receiver  v.  Warner,  49  Ohio  St.,  376 
V.  Second  N.  Bk.,  38  Fed.  Rep.,  883 
Aspinwall  v.  Butler,  133  U.  S.,  565  .     .     .     . 
Atlantic  N.  Bk.  v.  Harris,  118  Mass..  147  .     . 
State  Bank  v.  Savery,  82  N.  Y.  291  . 
Auburn  Savings  Bank  v.  Hayes,  61  Fed.  Rep.,  911 
Auten  V.  Manistee  N.  Bk.,  67  Ark.,  243  .... 


479 


PAGK 

.   143 

.   174 
.   144 
.   179 
110,  115,  116 
.   147 
24 
62 
.  61,  63 
.   120 
23 
53 
57 
.   172 
16 
.   174 
.   104 
39,  198 
68 
14 
160,  175 
17,  156 


Bailey  t?.  Mosher,  63  Fed.  Rep.,  488 170 

"      V.  Sawyer,  4  Dill.,  463;  1  N.  B.  C,  356 61 

"      V.   Tillinghast,   99   Fed.   Rep.,   801 61 

Baker  v.  Ault,  78  Fed.  Rep.,  374 196 

"     V.    Beach,    85    Fed.    Rep.,    836    ... 64 

"     V.  Reeves,  85  Fed.  Rep.,  837,  837 59,  60 

Baldwin  v.  State  N.  Bk.,  26  Minn.,  43 27 

Bank  v.  Kennedy,  17  Wall.,  19 157,  159 

V,  Lanier,  11  Wall.,  369 120,  121 

V.  Matthews,  98  U.  S.,  621 26 

V.  Mclntyre,   40  Ohio   St.,   528 68 

V.  Williams,  58  N.  J.  Law,  45    ... 142 

of  Bethel  v.  Pahquioque  Bank,  14  Wall.,  383     .     .       156,  159,  162 
Of  Cadiz  V.  Slemans,  34  Ohio  St.,  142 117 

•  • 

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PAGE 

Bank  of  Redemption  v.  Boston,  126  U.  S.,  60 139,  141 

Barnet  v.  Muncie  N.  Bk.,  98  U.  S.,  855 Ill,  115 

Batchelor  v.  United  States,  156  U.  S.,  426 183 

Bath  Savings  Institution  v.  Sagadehock  N.  Bk.,  89  Maine,  500     .       152 

Beckham  v.  Shackelford,  8  Tex.,  Cir.  App.,  660 174 

Beall  V.  Essex  Savings  Bk.,  67  Fed.  Rep.,  816 

Bell  V.  Hanover  N.  Bk.,  57  Fed.  Rep.,  821 172 

Binghampton  Trust  Co.  v.  Auten,  68  Ark.,  299 Ill 

Birmingham  N.  Bk.    v.  Mayer,  104  Alabama,  634 152 

Blair  v.  First  N.  Bk.  of  Mansfield,  10  Chicago  Legal  News,  84;  2 

N.  Bk.  Cas..  173 19 

Bletz  V.  Columbia  N.  Bk.,  87  Penn.  St.,  87 116,  194 

•*      V.  Bank  of  Kentucky,  55  S.  W.  Rep.,  697;  21  Ky.  L.  Rep., 

1554 21 

Board  of  Commissioners  v.  Elkton,  32  Ind.,  37 146 

Board  of  Commissioners  of  Morgan  Co.  v.  First  N.  Bk.,  57  N. 

E.    Rep.,    728 142 

Bobs  V.  People's  N.  Bk.,  21  Fed.  Rep.,  888 114 

Boone  County  N.  Bk.  v.  Latimer,  67  Fed.  Rep.,  27 173 

Bowdell  17.  Farmers'  and  Merchants'  N.  Bk.,  14  BanTcers*  Magazine, 

378;   2  N.  Bk.  Cases,  146 67 

Bowdell  V.  Farmers'  and  Merchants'  N.  Bk.,  Brown's  N.  Bk.  Cases, 

147 31 

Bowden  v.  Johnson,  107  U.  S.,  251 69,  159 

Bowen  v.  Needles  N.  Bk.,  94  Fed.  Rep.,  925 18 

Boyd  V.  Schneider,  131  Fed.  Rep.,  223 170 

124  Fed.  R'ap.,  539 170 

Boyer  v.  Boyer,  113  U.  S.,  690  .     , 143,  147 

Boynoll  v.  State,  25  Wis.,  112.         145 

Bradley  v.  The  People,  4  Wall.,  459 145 

Breese  v.  United  States,  106  Fed.  Rep.,  680 179,  183 

Briggs  V.  Spalding,  141  U.  S.,  132 47,  49 

BrinkerhofC  v.  Bostwick,  88  N.  Y.,  52 161,  170,  194 

Brittan  v.  Evansville  N.  Bk.,  105  U.  S.,  322 144 

Brown  v.  Ellis,  103  Fed.  Rep.,  834 63 

••      V.  Farmers'  and  Merchants'  N.  Bk.,  88  Tex.,  265  ....        51 

"      V.  Finn,  142  U.  S.,  56 55 

V.  French,   80  Fed.  Rep.,  166 147 

V.  Marion  N.  Bk.  of  Lebanon,  169  U.  S.,  416  .     .     .     .    113,  117 

"      V.  Schleier,  118  Fed.  Rep.,  981 25 

Bullard  v.  N.  Bk..  18  Wall.,  589 120 

Bundy  v.  Cocke,  128  U.  S.,  185 53 

*•      17.  Jackson,  24  Fed.  Rep.,  1628 122 

Burnham  v.  First  N.  Bk.,  53  Fed.  Rep.,  163 193 

Burrows  v.  Niblack,  84  Fed.  Rep.,  Ill    , 122 


«« 


IX 

PAGE 

Burrows  V.  Smith,  Treas.,  95  Va.,  694 144 

Bushnell  v.  Chatauqua  County  N.  Bk.,  74  N.  Y.,  290   ...     .         12 

V.  Leland,  164  U.  S.  684, 155 

Butler  17.  Eaton,  141  U.  S.,  240 31 

V.  Poole,  44  Fed.  Rep.,  586 62,  158,  160,  194 


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Cadle  V.  Baker,  20  Wall.,  650 156 

California  N.  Bk.,  v.  Kennedy,  167  U  S.,  362 13,  24 

Carr  v.  National  Bank  of  Watertown,  167  N.  Y.,  375 14 

Case  V.  Citizens'  Bank,  100  U.  S.,  446 31 

V.  Citizens'  Bank  of  Louisiana,  2  Woods,  23 171 

V.   Small,  10  Fed.  Rep.,  722 158 

Casey  v.  Galli,  94  U.  S.,  673 53,  61,  67,  198 

V.  La  Society  de  Credit  Mobilier  de  Paris,  2  Woods,  77  .      11,  172 

Castles  V.  City  of  New  Orleans,  46  La.  Ann.,  542 147 

Catch  V.  Fitch,  34  Fed.  Rep.,  566 60 

Central  N.  Bk.  v.  Pratt,  115  Mass.,  539 115 

Charleston  v.  People's  N.  Bk.,  5  S.  C,  103 38,  139 

National  Bank  v.  Bradford,  51  W.  Va.,   255    .     .    112,  115 

Chattahoochee  N.  Bk.  v.  Schley,  58  Ga.,  360 11 

Chemical  N.  Bk.  v.  Armstrong,   59   Fed.   Rep.,   372 163 

V.  Armstrong,  65  Fed.  Rep.,   573 15 

"        17.  Bailey,  12  Blackford,  480 162 

"            "        17.  Hartford  Deposit  Co.,  156  111.,  522  .     .     .    156,  159 

"        17.  Hartford  Deposit  Co.,  161  U.  S.,  1  .      .      .     .  156 

of  Chicago  v.  World's  Col.  Exposit'n,  170  Ills.,  82  164 

Church  17.  Ayer,  80  Fed.  Rep.,  543 63 

Citizens'  Bank  of  Louisiana  i7.  Board  of  Assessors,  52  Fed.  Rep., 

73        140 

Citizens'  N.  Bk.  v.  Dowd,  35  Fed.  Rep.,  340 173 

17.  Foreman's  Assignee,   111  Ky.,  206       .     .    110,  113 

of  Kingman  i7.  Berry,  53  Kan.,  696 20,  51 

City  N.  Bk.  i7.  Phelps,  97  N.  Y.,  44 68 

City  of  Boston  i7.  Beall,  55  Fed.  Rep.,  26  S.  C;   51  Fed.  Rep., 

300 146,  147 

City  of  Carthage  i7.  First  N.  Bk.,  71  Mo.,  508 146 

City  &  County  of  San  Francisco  17.  Crocker  &  Woolworth  N.  Bk., 

92  Fed.  Rep.,  273 139 

City  of  Richmond  17.  Scott,  48  Ind.,  568 145 

Cleveland,  Brown  &  Co.  v.  Shoeman,  40  Ohio  St.,  176  ....  13 

Clews  17.  Barden,  36  Fed.  Rep.,  617 49 

Cochran  v.  United  States,  157  U.  S.,  286 180,  181,  184 

Coffey  17.  N.  Bk.  of  Missouri,  46  Mo.,  140 11,  68 

Coffin  17.  United  States,  162  U.  S.,  664 179,  182,  183 


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PAGE 

I 

Cogswell  V.  Second  N.  Bk.,  56  Atl.  Rep.,  574 194 

Commercial  N.  Bk.  v.  Pirie,  27  C.  C.  A.,  171;  82  Fed.  Rep.,  799  .  19 

"      V.  Chambers,  182  U.  S.,  556 141,  145 

V.  Weinhard,  192  U.  S.,  243 125 

Commissioners  of  Rice  Co.  v.  Citizens'  N.  Bk.  of  Faribault,  23 

Minn.,    280 *     .  142 

Commonwealth   v.  Barry,  116  Mass.,  1 182 

V.  Feltan,  101  Mass.,  204 182,  1*4 

17.  Ketner,  92  Pa.  St.,  372 182,  194 

V.  Manf.  &  Mechs'.  Bk.  of  Phila.,  2  Pearson's  De- 
cisions, 386;   2  N.  Bk.  Cases,  456 146 

Commonwealth  v.  Tenny,  97  Mass.,  50 182 

Compare  San  R.  County  v.  California  N.  Bk.,  52  Fed.  Rep.,  59  .     .  173 

Conklin  v.  The  Second  N.  Bk.,  45  N.  Y.,  655 120,  121 

Contra  State  v.  Fields  (Iowa),  62  N.  Miss.,  535 183 

Cook  County  N.  Bk.  v.  United  States,  107  U.  S.,  445   .     .     .    163,  174 

Corcoran  v.  Batchelder,  147  Mass.,  541 120 

Corn  Exchange  Bank  v.  Blye,  101  N.  Y.,  303 173 

Cornell's  Executors  v.  First  N.  Bk.  of  Kansas  City,  32  U.  S.  App., 

426 38 

County  Commrs.  v.  Farmers'  and  Mechs'.  N.  Bk.,  48  Md.,  117    .     .  142 

Cox  V.  Elmendorf,   97  Tenn.,   518 64 

"     V.  Beck,   83  Fed.  Rep.,  269 Ill 

'*     V.  Montague,  78   Fed.   Rep.,   845 60 

"     V.  Robinson,  70  Fed.  Rep.,  760 21 

Cragie   v.   Hadley,   99   N.   Y.,   131 173 

Crocker  v.  First  N.  Bk.,  Thompson's  N.  Bk.  Cases,  317  ....  114 

V.  Whitney,  71  N.  Y.,  161 26 

Cross  V.  State  of  North  Carolina,  132  U.  S.,  131   .     .     .     .    181,  182 

Cummings  v.  N.  Bk.,  101  U.  S.,  153 147 

D 

Danforth  v.  Nat'l  State  Bank,  48  Fed.  Rep.,  271 110 

Davis   V.   Cook,   9   Mo.,   134 194 

V.  Essex  Baptist  Society  U.  S.  D.  C,  44  Conn.,  569  ...  65 

V.   Knipp,   92   Hun.,    297 174 

V.  Randall,  115  Mass.,   547 115 

V.  Stevens,  17  Blatchford,   259 69 

17.  The  Elmira  Savings  Bank,  U.  S.  Sup.  Ct.,  161  U.  S.,  275; 

Reversing  S.  C,  142  N.  Y.,  590 176 

"      17.  Weed,  44  Conn.,  569 63 

Delano  v.  Butler,  118  U.  S.,  634 39 

Delaware,  Lacka.  &  Western  R.  R.  Co.  v.  Oxford  Iron  Co.^  38  N. 

J.,  Eq.,   340 120 

Dennis  v.  First  N.  Bk.  of  Seattle,  127  Cal.,  453 194 


PAGE 

Denton  v.  Baker,  24  C.  C.  A.,  476;  79  Fed.  Rep.,  189 164 

Deposit  Bank  of  Owensboro  v.  Daviess  Co.,  102  Ky.,  174    .     .       145 

Deweese  v.  Smith,  106  Fed.  Rep.,  438 2,  52,  61,  62,  63 

Doty  V.  First  N.  Bk.  of  Larimore,  3  N.  D..  9 29,  30 

Dow  V.  United  States,  82  Fed.  Rep.,  904 179,  181 

Dresser  v.  Traders'  N.  Bk.,  165  Mass.,  120 21 

Driesbach  v.  N.  Bk..  104  U.  S.,  52 Ill,  112 

Duncan  v.  First  N.  Bk.  of  Mt.  Pleasant,  11  Bankers'  Magazine,  787      109 

E 

Bans  V.  Exchange  Bank,  79  Mo.,  182 68 

Earle  v.  Carson,  188  U.  S.,  42 54,  60 

"      V.  Carson,   107   Fed.   Rep.,   639 60 

"      V.   Conway,   178   U.    S.,   456 196 

"      V.  Pennsylvania,  178  U.  S.,  449 195 

Easton  v.  State  of  Iowa,  188  U.  S.,  220 183 

Eaton  V.  Union  County  N.  Bk.,  141  Ind.,  136 147 

Elder  v.  First  N.  Bk.   of  Ottawa,  12  Kans.,  238 120 

Ellerbee  v.  Nat'l  Exchange  Bank,  107  Mo.,  445 15 

Ellis  V.  First  N.  Bk.  of  Olney,  11  Bradw.,  275 Ill 

'•      V.  Little,  27  Kans.,  707 157,  158 

Elwood  V.  First  N.  Bk.,  41  Kans.,  475 151 

Engelke  et  al  v.  Schlender,  75  Tex.,  559 144 

Evans  v.  United  States,  153  U.  S.,  608 183 

Evansville  N.  Bk.  v.  Metropolitan  N.  Bk.,  2  Biss.,  527  .     .     .     .  120 

Exchange  Bank  v.  Peters,  45  Fed.  Rep.,  13 170 

Exeter  N.  Bk.  v.  Orchard,  42   Nebraska,   579 116 


Faber  v.  Hanover  N.  Bk.,  64  Fed.  Rep.,  832 174 

V.  Stephens,  35  Fed.  Rep.,  17 174 

Farmers'  N.  Bk.  v.  Templeton,  40  S.  W.  Rep.,  412 51 

Farmers'  and  Mchts'.  N.  Bk.  v.  Smith,  40  U.  S.  App.,  690  .     .     .  19,  20 

Farmers'  and  Mechs'.  Bank  v.  Hoagland,  7  Fed.  Rep.,  159   .     .  112 

Farmers'  arwi  Mechs'.  N.  Bk.  v.  Dearing,  91  U.  S.,  29  .     .     .     .  115 

Farmers'  and  Traders'  N.  Bk.  v.  Hoffman,  93  Iowa,  119,  191  .    140,  147 

Finn  v.  Brown,  142  U.  S.,  56 55 

First  N.  Bk.  v.  Bailey,  15  Mont.,  301 147 

V.  Brodhecker,  137  Ind.,  693 147 

V.  Chapman,  173  U.  S.,  205 141 

V.   Chehalis   Co.,   6   Wash.,   64 143 

V.  City  of  Richmond,  39  Fed.  Rep.,  309   .      .      .     .  144 

V.  Douglas  Co.,   3d   Dill.,   330 147 

V.  Forest,  40  Fed.  Rep.,  705 193 


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First  N.  Bk.  v.  Garlinghouse,  22  Ohio  St.,  492 
"  "        V.    Grimes,    49    Kans.,    219    . 

V.   Haire,   36   Iowa,   443    .     . 
V.  Hunter,  109  Tenn.,  91  .      . 
V.  Lindsay,  45  Fed.  Rep.,  619 
V.  Morgan,  132  U.  S.,  141  .     . 
V.  Nat'l  Exc.  Bk.,  92  U.  S.,  122 
V.  Peterborough,  56  N.  H.,  38 
V.   Strong,   138   111.,   347    .      . 
V.  Seidell,  120  Fed.  Rep.,  212 
V.  Watt,  184  U.   S.,  151    .      . 
Aberdeen  v.  Chehalis  County,  6  Wash.,  64 
Allentown  v.  Hock,  89  Pa.   St.,   324    . 
Centralia  v.  Marshall,  26  111.  App.,  440 
Charleston  v.  Nat'l  Exchange  Bank,  92  U 
Concord  v.  Hawkins,  33  U.  S.  App.,  747 
Concordia  v.  Rawley,  52  Kans.,  394    . 
Decatur  v.  Johnson,  97  Ala.,  655   .     . 
Dorchester  v.  Smith,  39  Neb.,  90   . 
Grand  Forks  v.  Anderson,  172  U.  S.,  573 
Leoti  V.  Fisher,  45  Kans.,  726   . 
Lynn  v.  Ocean  N.  Bk.,   60  N.  Y..   278 
Mead  Center  v.  Grimes,  49  Kans.,  219 
Moscow  V.  American  N.  Bk.,  173  Mo.,  153 
Mt.  Pleasant  v.  Tinstman,  36  Legal  Int'ligencer, 
Parker  v.  Pavey  E'v'tor  Co.,  10  S.  D.,  167 

Pierre  v.  Smith,  8  S.  D.,  7 

Richmond  v.  City  of  Richmond,  39  Fed.  Rep 
Rochester  v.  Harris,  108  Mass.,  514    . 
Rochester  v.  Pierson,  24  Minn.,  140   .      .  . 
of  Saint  Thomas  v.  Fleth,  10  N.  D.,  281  . 
Skowegan  v.  Maxfleld,  83  Me.,  576  . 
Tecumseh  v.  Overman,  22  Neb.,  116   . 
Youngstown  v.  Hughes,  2  N.  Bk.    Cas.,  176 

Fisher  v.   Yoder,    53   Fed.   Rep.,    565 

Flanagan  v.  California  N.  Bk.,  56  Fed.  Rep.,  959  . 

Florence  R.  R.  and  Imp.  Co.  v.  Chase  N.  Bk.,  106  Ala.,  364 

Foil's  Appeal,  21  Alb.  L.  J.,  2  N.  B.  C,  411  . 

Foster  v.  Wilson,  75  Fed.  Rep.,  797 
V.  Chase,  75  Fed.  Rep.,  797 

Fowler  v.  Scully,  72  Pa.  St.,  451  . 

Frazer  v.  Seibern,  16  Ohio  St.,  614 

Fridley  v.   Bowen,   87   111.,   151    . 

Freeman  Manuf.  Co.  v.  N.  Bk.  of  the  Republic,  160  Mass.,  398 

Fulton  V.  N.  Bk.  of  Dennison,  26  Tex.,  Civ.  App.,  115  .     . 


,  389 


PAGE 

115 

.       112 

27 

.       Ill 

143,  145 

113,  192 

13 

142 
11 

175 

113 

140 
13 

151 

17 

17,  52 

114 

173 

114 
23 
140,  144 
11 

112 
19 

109 
20 
15 

143 
19 
14 
27 
26 

116 

147 
159,  193 
20 

115 
32 
60 
60 
26 

145 
26 

196 
17 


228 


XUl 


640 


Gadsen   v.   Thrush,    56   Neb.,    565    .... 
Garner  v.  Second  N.  Bk.,  66  Fed.  Rep.,  369   . 

Gay  V.  Dare,   103   Cal.,   454 

Gibson  v.   Peters,   150   U.    S.,   342    ...     . 
Gilbert  v.  McNulta,  96  Fed.  Rep.,  83   .     .     . 
Gold  Mining  Co.  v.  Rocky  Mountain  N.  Bk.,  96  U. 
Graham  v.  Piatt,  28  Colorado,  421   .     .     .     . 
Graves  v.  The  Lebanon  N.  Bk.,  10  Bush.,  23 
V.  United  States,  165  U.  S.,  323   .     . 
Grow    V.    Cockrell,    63    Ark.,    418    ...     . 
Gruber  v.  First  N.  Bk.,  87  Penn.  St.,  468    . 
Guarantee  Co.  v.  Hanway,  104  Fed.  Rep.,  369 
Guernsey  v.  Black  Diamond  Coal  &  M.  Co.,  99  Iowa,  471 
Guild  V.  First  N.  Bk.  of  Deadwood,  4  S.  D.,  566  .     .     . 


PAGE 

24 
195 

56 
160 
1S3 
120 

54 

22 
181 

20 
109 
194 

51 
109,  113 


H 

Hade  v.  McVey,  31  Ohio  St.,  231 116,  194 

Hager  v.  Union  N.  Bk.,  63  Me.,  509 121 

Haire  v.  First  N.  Bk.,  36  Iowa 

Hale  V.  Walker,   31   Iowa,   344 57 

Hall  V.  First  N.  Bk.  of  Fairfield,  30  Neb.,  94,  99   ...     .    110,  113 

Hanna  v.  Lyon,  179  N.  Y.,  107 170 

Hanover  N.  Bk.,  v.  First  N.  Bk.  Burlingame,  109  Fed.  Rep.,  421  .         16 

Hanson  v.  Heard,  69  N.  H.,  190 20,  110 

Harkness  v.  Guthrie  (Utah),  75  Pac.  Rep.,  624 131 

Harrington  v.  First  N.  Bk.  Chittenango,  1  Thompson  &  Cook 

(N.    Y.),    361 22 

Haseltine  v.  Central  N.  Bk.,  183  U.  S.,  132 Ill 

Hayden  v.  Bank  of  Syracuse,  59  Hun.,  620 68 

V.  Chemical  N.  Bk.,  80  Fed.  Rep.,  587 172 

*•        V.  Thompson,  36  U.  S.  App.,  361 118 

Hayes  v.  Shoemaker,  39  Fed.  Rep.,  319 30,  35,  55,  61 

Hays  V.  Beardsley,  136  N.  Y.,  299 172 

Hazard  v.  Nat'l  Exchange  Bank  of  Newport,  26  Fed.  Rep.,  94  .     .         32 

Hazen  v.  Lyndonville  N.  Bk.,  70  Vt.,  543 194 

Hendee  v.  Connecticut,  etc.,  R.  R.  Co.,  26  Fed.  Rep.,  677  .      .      .       193 
Henderson  N.  Bk.  v.  Alves,  91  Ky.,  142  ..      .       112,  113,  114,  116,  194 

Hennessy  v.  City  of  St.  Paul,  54  Minn.,  219 23 

Hepburn  v.  School  Directors,  23  Wall.,  480 143 

Hershire  v.  First  N.  Bk..  35  Iowa,  272 147 

Higgins  V.  Fidelity  Insurance,  Trust  and  Safe  Deposit  Co.,  108 

Fed.  Rep.,  475 69 

Hill  V.  N.  Bk.  of  Barre,  15  Fed.  Rep.,  432 113 


XIV 

PAQE 

Hills  V.  Exchange  Bank,  105  U.  S.,  319 147 

Hinds  V.  Marmelejo,   60  Cal.,  225 109 

Hintermister  v.  First  N.  Bk.,  64  N.  Y.,  212 114,  115 

Hirsh  V.  Jones,  56  Fed.  Rep.,  137 171 

Hiscock  V.  Lacy,  N.  Y.,  9  Misc.,  578 117 

Hobert,  Receiver,  etc.  v.  Gould,   8  Fed.  Rep.,   57 62 

Hobbs  V.  Western  N.  Bk.,  U.  S.  Ct.  Ct.,  2  N.  Bk.  Cas.,  187   .     .  29 

Hodgson  V.  McKinstry,  3  Kans.  App.,  412 151 

Holmes  v.   Boyd,   90   Inc^.,   322 26 

Hoover  v.  Weiss  Malting  and  Elevator  Co.,  56  Fed.  Rep.,  356  .     .  196 

Home  V.  Greene,  52  Miss.,  452 146 

Hot  Springs  Indpnt.  School  District,  etc.  v.  First  N.  Bk.   H.  Spr., 

61  Fed.  Rep.,  417 159,  192 

Howard  N.  Bk.  v.  Loomis,  51  Vt.,  349 20 

Howe  V.  Barney,   45   Fed.   Rep.,   688 170 

Huggin  V.  Citizens'  N.  Bk.,  6  Tex.  Cir.  App.,  33 Ill 

Hughitt  V.  Hayes,  136  N.  Y.,  163 174 

Hulitt  V.  Bell,  85  Fed.  Rep.,  98 125 

Hunt,  Appellant,  etc.,  141  Mass.,  515 89 

Hutchinson  v.  Crutcher,  98  Tenn.,  421 156 

I 

In  re  Armstrong,  41  Fed.  Rep.,   381 172 

Beard's  Estate,  7  Wyoming,  104 63 

Earle,  96  Fed.  Rep.,  678 .158 

Earle,   92   Fed.   Rep.,   22 158 

Eno,  54  Fed.  Rep.,  669  .... 194 

Herman,   50  Fed.  Rep.,   517 160 

Manufacturers'  N.  Bk.,  5  Bissell,  499 156 

N.  Bk.  of  St.  Albans,  49  Fed.  Rep.,  120 53 

Stockholders  Cal.  N.  Bk.  of  San  Diego,  53  Fed.  Rep.,  38  .     .  158 

Third  N.   Bk.,   9   Bliss,   535 158 

Van  Campen,  2  Benedict,  419 178,  179 

Wild,  11  Blatchford,  243 109 

Interstate  N.  Bk.  v.  Ferguson,  48  Kans.,   732 11 

Irons  V.  Manufacturers'  N.  Bk.,  6  Biss.,  301 151,  155 

V.  Manufacturers'  N.  Bk.  et  al.,  17  Fed.  Rep.,  308  ...  59 


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Jackson  v.  United  States,  20  Ct.  Cls.,  298 163 

Jenkins   v.   Neff,    163   N.    Y.,    320 142 

V.  Neff,  186  U.  S.,  230 141 

Johnson  v.  Charlottesville  N.  Bk.,  2  Hughes,  657 18 

V.  Laflln,  5  Dill.,  65 31 

V.  Laflin,  103  U.  S.,  800 30,  31 


M 


XV 

PAGE 

Johnson  V.  N.  Bk.  Gloversville,  74  N.  Y.,  329 109 

Johnston  v.  United  States,  17  Ct.  Cls.  Rep 

Jones  V.  Rushville  N.  Bk.,  138  Ind.,  87 147 

K 

Kelsey  v.  N.  Bk.  of  Crawford,  69  Pa.  St.,  426 68 

Kennedy  v.  Gibson,  8  Wall..  498,  505   .      .      61,  155,  156,  159,  160,  162 

Keyser  v.  Hitz,  133  U.  S.,  138 3,  31,  53,  54,  55,  69,  198 

King  V.  Armstrong,  50  Ohio  St.,  222 63,  174 

V.  Pomeroy,  C.  C.  of  App.,  121  Fed.  Rep.,  287  .     .     .        155,  171 


*t 


L 
La  Dow  V.  First  N.  Bk.  of  New  London,  Sup.  Ct.  Ohio,  1894  .     .      110 

Lang  V.  Burley,  101  111.,  591 55 

Lantry  v.  Wallace,  182  U.  S.,  536 64,  121 

Lake  Erie,  etc.,  R.  R.  Co.  v.  Indianapolis  N.  Bk.,  65  Fed.  Rep.,  690      173 

Lanham  v.  First  N.  Bk.  of  Crete,  46  Neb.,  663 115 

Lasater  v.  First  N.  Bk.  of  Jacksboro,  96  Tex.,  345 115 

Latimer  v.  Bard,   76   Fed.   Rep.,   536 37,  56 

Lazear  v.  Nat'l  Union  Bank  of  Baltimore,  52  Md.,  73,  78  .       14,  114,  115 

Leach  v.  Hale,  31  Iowa,  69 11,  14 

Leather  Manufacturers'  N.  Bk.  v.  Cooper,  120  U.  S.,  778  .     .     .     .       192 

Leevis  v.  Levitz,  74  Fed.  Rep.,  381 55 

Lewis  V.  Switz,  74  Fed.  Rep.,  1 65 

Libby  v.  Union  N.  Bank,  99  111.,  622 26 

Lilly  V.  Board  of  Commissioners,  69  N.  C,  300 146 

Linn  County  N.  Bk.  v.  Crawford,  69  Fed.  Rep.,  532  .     .     .     .    159,  193 

Lionberger  v.  Rouse,  9  Wall.,  486 144,  145 

Lockwood  V.  The  American  N.  Bk.,  9  R.  I.,  308 69 

Logan  County  N.  Bk.  v.  Townsend,  139  U.  S.,  67,  73  .     .     .     11,  22,  193 

Luberg  v.   Commonwealth,    94   Pa.    St.,    85 182 

Lucas  V.  Coe,  86  Fed.  Rep.,  972 64 

"      V.  Government   N.  Bank,  78  Pa.  St.,  228 112 

Lull  V.  Anamosa  National  Bank,  111  Iowa,  537 147 

Lynch  v.  Bank,  22  West  Va.,  534 114 

M 

Magoffin  V.  Boyle  National  Bank  of  Danville,  Ky.,  695  W.  Rep., 

702;  24  Ky.  L.  Rep.,  785 26 

Magruder  v.  Colston,  44  Md.,  349 57 

Marion  N.  Bk.  v.  Thompson  (Ky.),  40  S.  W.  Rep.,  903      ...       Ill 

Massey  v.  Fisher,  62  Fed.  Rep.,  958  ... 173 

Mathews  v.  Columbia  N.  Bk.,  79  Fed.  Rep.,  558 39,  43 

Matter  of  Tuttle  v.  Iron  National  Bank,  170  N.  Y.,  9     .     .     .    151,  194 


XVI 


165 


U 


Mayor  v.  First  N.  Bk„  59  Ga.,  648 

McCann  v.  First  N.  Bli.  of  Jeffersonville,  112  Ind.,  354 

McCartney  v.  Earle,  115  Fed.  Rep.,  462 

McCormick  v.  Market  N.  Bk.  of  Cliicago,  162  111.,  100; 

538   S.   C 

McCreary  v.  First  N.  Bk.,  109  Tenn.,  128      ... 
McDonald  v.  Chemical  Bk.,  174  U.  S.,  610  .     .     .     . 

V.  Thompson,  184  U.  S.,  71 

McFarlin  v.  First  N.  Bk.  of  Kansas  City,  68  Fed.  Rep.,  868 
McGhee  v.  First  N.  Bk.  Tobias,  40  Neb.,  92       .      .     . 
McKnight  v.  U.  S.,  115  Fed.  Rep.,  972,  54  C.  C.  A.,  358 

McLain  v.  Rankin,  119  Fed.  Rep.,  110 

McMahon  v.  Macy,   51  N.  Y.,   155 

Mechanics'  N.  Bk.  v.  Baker,  65  N.  J.  Law,  113  .     . 
Mercantile  N.  Bk.  v.  Mayor,  172  N.  Y.,  35  .     .     .     . 

V.  N.  Y.,  121  U.  S.,  138  ...      . 
V.  Shields,  59  Fed.  Rep.,  952  .     . 

Mercer  v.  Dyer,  15  Mont.,  317 

Merchants'  N.  Bk.,  v.  State  N.  Bk.,  10  Wallace,  604  . 
*'      V.  Glendon,  120  Mass.,  97  .     .     . 
"      V.  Hanson,  33  Minn.,  40  ...     . 
V.  Sevier,  14  Fed.  Rep.,  662     .     . 
"      V.  United  States,  101  U.  S.,  1  .     . 
"  "      V.  Wehrmann,  69  Ohio   Street,  160 

Merrill  v.  Florida  Land  and  Imp.  Co.,  60  Fed.  Rep.,  17 
Merville  v.  N.  Bk.  of  Jacksonville,  41  U.  S.  App.,  529 
Metropolitan  N.  Bk.  v.  Clagett,  141  U.  S.,  520  .     .     . 

"  Stock  Exchange  v.  Lyndonville  N.  Bk.  (Vt 

Rep.,  101 

Meyers  v.  Valley  N.  Bk.,  13  Nat'l  Bankruptcy  Register, 
Michigan  Ins.  Bank  v.  Eldred,  143  U.  S.,  293  .     .      . 
Miller  v.  First  N.  Bk.  of  Cincinnati,  46  Ohio  St.,  424  . 

"     V.  Howard,  95  Tenn.,  407 

Missouri  River  Telg.  Co.  v.  First  N.  Bk.  of  Sioux  City,  74  III., 
Mix  V.  N.  Bk.  of  Bloomington,  91  111.,  20  ...     . 

Moore  v.  Jones,  3  Woods,  53 

Moss  V.  Whitzel,  108  Fed.  Rep.,  579 

Movius  V.  Lee,  30  Fed.  Rep.,  298 

Multnomah  County  v.  Oregon  N.  Bk.,  61  Fed.  Rep.,  912 


« 


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146 

41 

193 


9,  25 

113,  116 

172 

62 

38,  56 

113 

177 

157,  158 

65 

142 

142 

141,  143 

144 

174 

90,  104 

198 

15 

112 

138 

21 

60 

159,  162,  1G3 

67,  68,  193 

57  Atl. 

22 

121 

67 

139 

48 

116 

198 

57 

151,  164 

47 

173 


217 


N 

Nat'l  Bank  17.  Bruhn,  64  Tex.,  571 109 

V.   Carpenter,  52  N.  J.  Law,  165 114 

"    V.   Case,  99  U.  S.,  628 13,  57,  59,  122 

"  V.  Commonwealth,  9  Wall.,  353 146 


XVll 

Nat'l  Bank  v.  Drake,  35  Kans.,  5G4 4G 

V.  Graham,  100  U.  S.,  699 11 

"  V.  Insurance  Co.,   104   U.   S.,   54 151 

V.  Johnson,  104  U.  S.,  271 109,  110 

"  V.  Kennedy,  17  Wall.,  19 159 

V.  Matthews,  98  U.  S.,  621 15,  23,  27 

V,  Whitney,  103  U.  S.,  99 15 

Nat'l  Exchange  Bank,  Baltimore,  v.  Peters,  44  Fed.  Rep.,  13  .     .       171 

Hartford,  v.  Guy,  57  Conn.,  224  . "    .     .     .         74 

Nat'l  Bank  of  Auburn,  v.  Lewis,  81  N.  Y.,  15 11,  112 

••  Chattanooga,  v.  Mayor,  8  Heiskell  (Tenn.),  814  .    113,  146 

"  Commerce  v.  Atkinson,  55  Fed.  Rep.,  465   .     .     .     .  18,  51 

Commonwealth  v.  Mechanics'  N.  Bk.,  94  U.  S.,  437  .       162 

"  Daingerfield  v.  Ragland,  181  U.  S.,  45 114 

'"  Jefferson  v.  Fare,  25  Fed.  Rep.,  200 192 

Guthrie  v.  Earl,  2  Okl.,  617 20 

•*  Rahway  v.  Carpenter,  52  N.  J.  Law,  165 114 

"  Virginia  v.  City  of  Richmond,  42  Fed.  Rep.,  877  .     .       140 

*•  Winterset  v.  Eyre,  52  Iowa,  114 115,  116 

Xenia  v.  Stewart,  107  U.  S.,  676 121 

Nat'l  Park  Bank  of  City  of  N.  Y.  v.  Harmon,  25  C.  C.  A.,  214;  79 

Fed.  Rep.,  891 59 

Nat'l  State  Bank  v.  Brainard,  61  Hun.,  339      .......      112 

"  "        Camden  v.  Pierce,  18  Albany  Law  Jrnl.,  16,'  2  N. 

Bk.  Cas..  177 146 

Nat'l  State  Bank  of  Oskaloosa  v.  Young,  25  Iowa,  311  ....       139 

V.  Young,  25  Iowa,  311 142 

Nat'l  Security  Bank  v.  Butler,  129  U.  S.,  223 172 

V.  Price,  22  Fed.  Rep.,  697 172 

Nelson  v.  Burrows,  9  Abb.  N.  C,  280 170 

Nevada  Bank  of  San  Francisco  v.  Portland  N.  Bk.,  59  Rep.,  338  .         20 
Newall  V.  Somerset  First  N.  Bk.  (Ky.),  13  Ky.  L.  Rep.,  275  .     .       115 

V.  N.  Bk.  of  Somerset,  12  Bush.,  57 109,  116 

New  Orleans  N.  Bk.  v.  Raymond,  29  La.  Ann.,  355 26 

Newport  N.  Bk.  v.  Board  of  Education  of  Newport,  Ky.,  705  W. 

Rep.,  186;  24  Ky.  L.  Rep.,  876 14 

Newton  N.  Bk.  v.  Newbegun,  74  Fed.  Rep.,  135 60 

Niagara  County  Bank  v.  Baker,  15  Ohio  St.,  85 15 

Norfolk  N.  Bk.  v.  Schwenk,  46  Neb.^  381  .     .     .     .    Ill,  112,  115,  116 
North  Ward  N.  Bk.  v.  City  of  Newark,  39  N.  J.  Law,  380    ..     .       142 

O 

Gates  V.  First  N.  Bk.,  100  U.  S.,  239 115 

Ocean  N.   Bk.   v.  Carll,   7   Hun.,   237 194 

O'Connor  v.  Wltterly,  111  Cal.,  523 61 

Z 


XVlll 

PAOE 

O'Hare  v.  Second  N.  Bk.  of  Titusville,  77  Pa.  St.,  96 120 

Opinions  of  Attorney  General,  Vol.  17 94,  123 

Ordway  v.  Central  N.  Bk.,  47  Md.,  217 116,  194 

Ornn  v.  Merchants'  N.  Bk.,  16  Kans.,  34 2G 

Osborne  v.  First  N.  Bk.  of  Athens,  175  Pa.  St..  474  .     .     .     .    113,  114 


Pacific  N.  Bk.  v.  Eaton,  141  U.  S.,  227 

V.  MiXter,  114  U.  S.,  462;  124  U.  S.,  721  . 

Palmer  v.  McMahon,  133  U.  S..  660 

Pape  V.  Capital  Bank  of  Topeka,  20  Kans.,  440  .     .     . 

Park  N.  Bank  of  Chicago  v.  Neblack,  67  111.  App.,  583  . 

Patterson  v.  Plummer,  10  N.  D.,  95 

Pattison  v.  Syracuse  N.  Bk.,  80  N.  Y.,  82,  92  .     .     .     . 

Paul  V.  McGraw,  3  Wash.  St.,  296 

Pauly  V.  State  Loan  &  Trust  Co.,  165  U.  S.,  606  .     .     . 

Pelton  V.  Commercial  N.  Bk.,  101  U.  S.,  143  .     .     .     . 

People   V.   Commissioners,   4   Wall.,    241 

V.  Remington,  121  N.  Y.,  328 

V.  Weaver,  100  U.  S.,  539,  reversing  S.  C,  67  N.  Y 

People's  Bank  of  the  City  of  N.  Y.  v.  Mechanics'  N.  Bk.  of  New- 
ark, 62  How.  Pr.,  422 

People's  State  Bank  of  Lakbta  v.  Francis,  8  N.  D.,  369  . 

Pepper  v.  Fidelity  and  Casualty  Co.,  125  Fed.  Rep.,  822 

Peterborough  N.  Bk.  v.  Childs,  133  N.  Y.,  248   .     .     . 

Peters  v.  Commercial  N.  Bk.,  142  U.  S.,  614  .... 

V.  Foster,  56  Hun.,  607 

••      et   al   V.    Bain,    133    U.    S..    670 

Philler  v.  Patterson  (Pa.),  168  Pa.  St.,  468  .     .     .     . 

Pickett  V.  Merchants'  N.  Bk.  of  Memphis,  34  Ark.,  346 

Pittsburgh  Locoe.  &  Car  Works  v.  State  N.  Bk.,  U.  S.  Cir 
1875;    Thompson  N.  Bk.   Cases,   315    . 


Planters'  L.  and  S.  Bank  v.  Berry,  Ga.,  92  Ga.,  264 
Piatt  V.  Beach,  2  Benedict,  303  .     .     .     . 

"      V.  Beebe,  57  N.  Y.,  339 

Potter  V.  United  States.  U.   S 

Prescott  V.  Haughey,  65  Fed.  Rep.,  653   . 
N.   Bk.   V.   Butler.  157  Mass.,    548 
Price  V.  Abbott,  17  Fed.  Rep.,  506  .     .     . 
V.  Coleman,   22  Fed.  Rep.,  694    .     . 
V.  Yates,  19  Alb.  Law  Journal,  295;  2  N.  Bk.  Cases,  204 


<( 


(( 


516 


.  31,  39 

160,  195 

141 

15 

156 

146 

11 

147 

68 

142,  147 

144 

163 

144 


Ct 


195 

157,  161 

160 

111 

192 

156,  160 

54 

22 

112 


13 

195 
160 
155 
185 
171 
15,  23 
160 
172 
62,  158 


Rankin  v. 
Raynor  v. 


Fidelity  Ins.  Co.,  189  U.  S.,  242 
Pacific  N.  Bk..  93  N.  Y.,  371   . 


.  58.  59 
.       195 


PAGE 

Reynolds  v.  Ciawfordsville  Bank.  112  U.  S.,  405 15,  27 

V.  Tonzalin  Imp.  Co.,  62  Neb.,  236 23 

Richardson   v.   Turner,    52    La.   Ann.,    1613 158 

Richmond  v.  Irons,  121  U.  S.,  27 52,  53,  54,  55,  151,  155 

Riddle  v.  First  N.   Bk.,   27   Fed.  Rep.,   503 89 

Roberts  v.  Hill,  23  Fed.  Rep..  31 172 

Robertson  v.  Buffalo  Co.  N.  Bk.  (Neb.),  40  Neb.,  235  ...     .         21 

Robinson  v.  Hall.  63  Fed.  Rep.,  222 48,  161 

V.  Hill,   63   Fed.   Rep.,   522 22 

"  V.  Southern  National  Bank,  94  Fed.  Rep.,  964  .     .     .        58 

"  V.  Turrentine,  59  Fed.  Rep.,  554 53 

Rockwell  V.  Farmers*  N.  Bk.,  4  Colo.  App.,  562  .     .  •  .     .     .    109,  110 

Rosenblatt  v.  Johnson,  104  U.  S.,  462 145 

RuflBn  V.  Board  of  Commissioners,  69  N.  C,  498  .     .     .     .     .     .      146 

S 

Schaberg's   Estate  v.  McDonald   60  Neb.,   493 158 

Schofield  V.  State  N.  Bk.,  97  Fed.  Rep.,  282 19 

V.  Twining,  127  Fed.  Rep.,  486 55 

San  Diego  County  v.  California  N.  Bk.,  52  Fed.  Rep.,  59  .     .     .  173 

Schrader  v.  Manufacturers'  N.  Bk.,  133  U.  S.,  67 52 

Schrader  v.  Manufacturers'  N.  Bk.  of  Chicago,  133  U.  S.,  67  .     .  151 

Schuyler  N.  Bk.  v.  Bullong,  28  Neb.,  684 113,  116,  194 

V.  Bullong,  24  Neb.,  321 113 

V.  Gadsen,  191  U.   S.,  451 116 

Scott  V.  Armstrong,  146  U.  S.,  499 174 

V.  Latimer,  89  Fed.  Rep.,  843 .     .  38,  64 

V.  United  States,  130  Fed.  Rep.,  429 179 

Second  N.  Bk.  of  Oswego  v.  Burt,  93  N,  Y.,  233 Il8 

Second  N.  Bk.  Richmond  v.  Fitzpatrick,  111  Ky.,  228  .       110,  113,  114 

Seeber  v.  Commercial  N.  Bk.  of  Ogden,  77  Fed.  Rep.,  957   .     .  23 
Seeley  v.  N.  Y.  Nat'l.  Exc.  Bank,  8  Daly,  400;    affirmed  78  N. 

Y.,    608        41 

Seligman  v.  Charlottesville  N.  Bk.,  3  Hughes,  647  .....  18 

Shafer  v.  First  N.  Bk.,  53  Kans.,  614 .  112 

Shoemaker  v.  Nat'l.  Mechs'.  Bank,  2  Abb.  U.  S.,  416;  N.  Bk.  v. 

Case,  96  U.  S.,  628 13 

Shunk  V,  First  N.  Bk.  of  Gallon,  22  Ohio  St.,  508 112 

Simons  v.  Fisher,  55  Fed.  Rep.,  905 51 

Slaughter  v.  First  N.  Bk.  of  Montgomery,  109  Ala.,  W. 

Rep.,   653 115,  117,  132,  183 

Smith  V.  First  N.  Bk.,  115  Ga.,  608 120 

V.  Exchange  N.  Bk.  of  Pittsburg,  26  Ohio  St.,  141  .     .      14,  115 

V.  First  N.  Bk.,  45  Neb.,  444 120 

V.  First  N.  Bk.,  42  Neb.,  687 113 


tt 


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«< 
(I 

(C 


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« 


XX 

FAQE 

Smithson  v.  Hubbell,  81  Fed.  Rep.,   593 193 

Snohomish  Co.  v.  Puget  Sound  N.  Bk.,  Everett,  81  Fed.  Rep.,  518  192 

Snyder  v.  Mount  Sterling  N.  Bk.,  94  Ky.,  231 113 

Sowles  V.  Witters  et  al.,  39  Fed.  Rep.,  403 62 

Spofford  V.  First  N.  Bk.  of  Tama  City,  37  Iowa,  181   ...     .  13 

Spokane  County  v.   Clark,   61   Fed.   Rep.,   538 173 

Stafford  N.  Bk.  v.  Davis,  59  N.  H.,  38 .  142 

Stanton  v.  Wilkison,  8  Benedict,  357 .      52,  160 

State  V.  Bardwell,  72  Miss.,  535 183 

V.  Easton,  113  Iowa,  516 183 

V.  Fields   (Iowa),  62  N.  W.  Rep.,  653 183 

17.  Menke,  52  Bankers'  Magazine,  335 183 

V.  Tuller,   34  Conn.,   280 182 

Stephens  v.  Bernays,  41  Fed.  Rep.,  401 160 

V.  Follett,  43  Fed.  Rep.,  842 56 

V.  Monongahela  Bank,  111  U.  S.,  197 115 

V.  Overstolz,  43  Fed.  Rep.,  465 170 

V.  Overstolz,  43  Fed.  Rep.,  771 171 

Stewart  v.  The  Nat'l  Union  Bank  of  Maryland,  2  Abb.  U.  S.,  424  .  120 

St.  Leuis  N.  Bk.  v.  Papin,  3  Cent.  L.  J.,  669;  1  Nat'l  Bk.  Cas.,  326  142 

Strong  V.  Southworth,  8  Ben.,  331 61 

Stuart  V.  Bank  of  Staplehurst,  57  Neb.,  569  ......     .  171 

"      V.  Hayden,  169  U.  S..  1 59,  60 

Studebaker  v.   Perrin,  184  U.  S.,  252 63 

V.   Perry,  102  Fed.  Rep.,  947 63 

Supervisors  v.   Stanley,  105  U.  S.,  305 .  .  144 

Sykes  v.   Canton  First  N.  Bk.,  2  S.  D.,  242 11 

T 

Talbott  V.  Silver  Bow  Co.,  139  U.  S.,  441,  438 141,  145 

Tapley  v.  Martin,  116  Mass.,   275 22,  198 

Taylor   v.   Hutton,   43   Bach.,   195 51 

Teague  v.  First  N.  Bk.,  Salina,  5  Kans.  App.,  300 115 

Tecumseh  N.  Bk.  v.  Chamberlain  Banking  House,  63  Neb.,  163  .       161 

Thatcher  v.  West  River  N.  Bk.,  19  Mich.,  196 198 

Thayer  v.  Butler,  141   U.   S..   234 31,  56 

Third  N.  Bk.  v.  Blake.  73  N.  Y.,  260 13,  22,  27 

17.  Buffalo  Ger.  Ins.  Co.,  193  U.  S.,  581   ..     .    120,  121 

"  "        17.  Hughes,  76  Fed.  Rep.,  385 147 

•«         ••        of  Philadelphia  i?.  Miller,  90  Pa.  St.,  241  ...     .       113 

Thomas  v.  City  N.  Bk.  of  Hastings,  40  Neb.,  501 19 

"        17.  Farmers'  Bank  of  Maryland,  46  Md..   43    ...     .         69 
Thompson  v.  German  Insurance  Co.,  76  Fed.  Rep.,   892    .     .    62,  159 
17.   St.  Nicholas  N.  Bk.,  146  U.   S.,  240;    S.  C.  113; 
N.  Y.,  325 15,  126 


XXI 

PAGE 

Tiffany  v.   N.   Bk..   18   Wallace,   409 109 

TlUinghast  v.  Bailey,  86  Fed.  Rep.,  46 56 

Timberlake  v.  First  N.  Bk.,  43  Fed.  Rep.,  231  .       110,  113,  114,  115,  116 

Tootle  V.  N.  Bk.  of  Port  Angeles,  6  Wash.,  181 23 

Tourtelot  v.  Stoltenben,  101  Fed.  Rep.,  362 59 

Town  Council  of  Lexington  v.  Union  N.  Bk.,  75  Wis.,  1  .      .     .  23 

Town  of  Farmington  v.  Downing,  Supreme  Ct.  of  N.  H.,  67,  441  .  144 

Tracey  v.  Talmage,  18  Barb.,  456 15 

Traders'  N.  Bk.  v.  Cbipman,  164  U.  S.,  347 175 

Trenholm,  Compt.  of  Cy.  v.  Commercial  N.  Bk.  of  Dubuque,  38 

Fed.  Rep.,  323 169 

Trustees'  First  Presbn.  Ch.  v.  Nat'l  State  Bk.,  57  N.  J.  Laws,  27  .  23 

Turner  v.  First  N.  Bk.,  2  Iowa,  562 163 


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United  States  v.  Allen,  47  Fed.  Rep.,  696  .     . 

17.  Breece,  131  Fed.  Rep.,  915,  916 

V.  Britton,  108  U.  S.,  193,  199  . 

V.  Britton,  107  U.   S.,   655    .     . 

V.  Cadwallader,  59  Fed.  Rep.,  677 

V.   Conners,   111   Fed.   Rep.,   734 

t7.  Curtis,  107  U.  S.,  671  .     . 

V.  Crecelius,  34  Fed.  Rep.,  30 

V.  Ege,  49  Fed.  Rep.,  852    . 

V.  Eno,  56  Fed.  Rep.,  218   . 

V.  Fish,  24  Fed.  Rep.,  585   . 

V.  French,  57  Fed.  Rep.,  382 

V.   German,    115    Fed.    Rep.,    987 

V.   Graves,   53   Fed.   Rep.,   634,   700    .     .       179, 

V,  Harper,  33  Fed.  Rep.,   471    . 

V.  Hughitt,  45  Fed.  Rep.,  47    . 

V.  Jewett,   84  Fed.  Rep.,  142    . 

V.  Knox,  102  U.  S.,  422   .     .     . 

V.  Means  et  al.,  42  Fed.  Rep.,  599 

V.  Northway,  129  U.  S.,  327  .     . 

V.  Potter,  56  Fed.  Rep.,  83  .     . 

V.  Taintor,  11  Blatchford,  374   . 

V.   Twining,   132   Fed.   Rep.,   129 

V.  Warner,  26  Fed.  Rep.,  616   . 

ex  rel.  Cond.  v.  Barry,  36  Fed.  Rep.,  246 

V.  N.  Bk.  of  Asheville,  73  Fed.  Rep.,  379 

V.  First  N.  Bk.  of  Little  Rock,  79  Fed.  Rep.,  296 
U.  S.  N.  Bk.  V.  First  N.  Bk.  of  Little  Rock,  79  Fed-  Rep.,  296 
Upton  V.  N.  Bk.  of  South  Reading.  120  Mass.,  153  . 


tt 


tt 


tt 


tt 


tt 


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tt 


tt 


tt 


«< 


• 

179 

• 

178 

• 

179 

178, 

179 

• 

184 

• 

187 

46, 

183 

• 

179 

• 

180 

• 

183 

• 

178 

• 

184 

• 

178 

180, 

181 

178, 

179 

180 

184 

52 

179, 

180 

183 

184 

179 

197 

183 

44 

66 

51 

16 

26 

XXll 


PAGE 

Van  Allen  v.  The  Assessors,  3  Wall.,  573  .     .     .     .      34,  139,  142,  145 

Van  Lenven  v.  First  N.  Bk.,  54  N.  Y.,  671 '    .         li 

Van  Reed  v.  People's  N.  Bk.,  173  N.  Y.,  314 I95 

Van  Slyke  v.  State,  26  Wis.,   655 I45 

Veazie  Bank  v.  Fenno,  8  Wall.,  533 ,       133 

Venango  N.  Bk.  v.  Taylor,  56  Pa.  St.,  14 174 


W 


,  870 


581 
371 


Waite  17.   Dowl,   94   U.   S.,   527 

Waldron  v.  Ailing,  73  App.  Dw.  (N.  Y.),  86  .     .     . 

Walden  N.  Bk.  v.  Birch,  130  N.  Y.,  221   ...     . 

Walker  v.  Windsor  N.  Bk.,  56  Fed.  Rep.,  76  .     .     . 

Washington  N.  Bk.  of  Tacoma  v.  Eckels,  57  Fed.  Rep 

V.  King's  County,  9  Wash.,  607  . 

Watkins  v.  N.  Bk.  of  Lawrence,  51  Kan.,  254 

Watt  V.  First  N.  Bk.  of  Minn.,  76  Minn.,  458 

Weber  v.  Spokane  N.  Bk.,  64  Fed.  Rep.,  208  . 

Weckler  v.  First  N.  Bk.  of  Hagerstown,  42  Md 

Weeks  v.  International  Trust  Co.,  125  Fed.  Rep 

Welles  V.  Graves,  41  Fed.  Rep.,  459  .     .     .     . 
"        V.  Larrabee  et  al.,   36   Fed.   Rep.,   866 
*•        V.  Stout,  38  Fed.  Rep.,  807   .      .      .     . 

Western  N.  Bk.  v.  Armstrong,  152  U.  S.,  346 

Westervelt  v.  Mohrenstecher,  40  U.   S.  App.,  227 

Wheeler  v.  Union  N.  Bk.,  96  U.  S.,  785  .     .     . 

Wheelock  v.  Kost,  77  111.,  296 

Whitbeck  v.  Mercantile  Bank,  127  U.  S.,  193 

White  V.  Knox,  111  V.  S.,  784 

Whitney  v.  Butler,  118  U.  S.,  655   ...     . 
N.  Bk.  V.  Parker,  41  Fed.  Rep.,  402  . 

Wickham  v.  Hull,  60  Fed.  Rep.,  325   ..     . 

Wichita  N.  Bk.  v.  Smith,  36  U.  S.  App.,  530  . 

Wiley   V.    Starbuck,    44    Ind.,    298    ...     . 

V.  First  N.  Bk.  of  Brattleboro,  47  Vt.,  546 

Willard  Mfg.  Co.  v.  Tierney,  130  N.  C,  611   .     . 

Williams  v.  American  N.  Bk.,  Arkansas  City,  85  Fed.  Rep 

Williamson  v.  Amer.  Bk.,  109  Fed.,  36;  115  Fed.  Rep.,  793 

Winter  v.  Baldwin,  89  Ala.,  483  .     .     . 
V.  Sowles,  38  Fed.  Rep.,  700   . 

Witters  v.  Foster,  28  Fed.  Rep.,  737    . 
V.  Sowles,  35  Fed.  Rep.,  640    . 

Wolverton  v.  Exchange  N.  Bk.,  11  Wash 

Woodward  v.  Ellsworth,  4  Colo.,  580  . 


94 


.       147 

63,  158 
.  121 
.       192 

151,  155 
143,  148 
151,  152 
.       114 
.       122 
13 
25,  194 
169,  170.  171 
.  58,  65 
62 
16 
22 
116.  117 
57,  155 
142 
162 
54 
140 
53.  193 
192 
109,  115 
11 
195 
30 

64,  151 
30 
53 

192 

53 

109 

145 


376 
63, 


XXlll 

PAGE 

Wright  V.  First  N.  Bk.,  8  Bliss.  243 114 

"        V.  Merchants'   N.   Bk.,   1    Flippin,    561 155 

Wylie  V.  Northampton  Bk.,  119  U.  S.,  361 12 

Wyman  v.  Citizens'  N.  Bk.,  Faribault,  29  Fed.  Rep.,  734  .     .     .  120 


Yakima  N.  Bk.,  v.  Kinne,  6  Wash.,  348   .     . 
Yardley  v.  Clothier,  49  Fed.  Rep.,  337;    51  Fed 

V.  Wilgus,  56  Fed.  Rep.,  965   .      .     . 
Yerkes  v.  N.  Bk.  of  Port  Jervis,  69  N.  Y.,  383 
Young  17.  McKay,  50  Fed.  Rep.,  397,  594   .     . 
V.  Wempke,  46  Fed.  Rep.,  354  .     .     . 


Rep, 


506 


109,  198 

174 

56 

14 

30,  55 

156 


Zinn  V.  Baxter,  65  Ohio  St.,  341 170 


INDEX  TO  SECTIONS  OF  U.  S.  REVISED  STATUTES 

AND  ADDITIONAL  ACTS  RELATING 

TO  NATIONAL  BANKS. 


SECTIONS  OF  U.  S.  REVISED  STATUTES. 


U.  S. 

Revised 

Statute 

Section. 


324 

325 

326 

327 

328 

329 

380 

331 

«So^.*  •••• 

333 

380 

736 

884 

885 

3411 

3412 

3413 

3414 

3415 

3416 

3417 

3701 

3811 

6133 

5134 

5136 

6136 

5137 

6138 

6139 

5140 

5141 

6142 

5143 

6144 

5145 

6146 

6147 

5148 

6149 

6150 

6151 

6152 

6153 

6154 


Digest 
Section. 


2 
3 

4 
5 
6 
7 
8 
9 

10 

11 

184 

183 

185 

186 

140 

141 

142 

143 

144 

145 

146 

149 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

36 

37 

38 


Page. 


2 

2 

2 

3 

3 

3 

4 

4 

4 

5 

196 

196 

197 

198 

136 

136 

136 

137 

137 

138 

138 

148 

6 

8 

9 

9 

10 
24 
28 
29 
32 
33 
38 
40 
42 
44 
44 
45 
49 
50 
50 
52 
64 
66 
67 


U.  S. 
Revised 
Statute 
Section. 


5155 

5157 

5158 

5169 

5160 

5161 

5162 

5163 

5164 

5165 

5166 

5167 

5168 

5169 

5170 

5172 

5173 

5174 

5175 

5182 

5183 

5184 

5185 

5186 

5187 

5188 

5189 

5190 

5191 

5192 

5195 

5196 

5197 

5198 

5199 

5200 

5201 

5202 

5203 

5204 

5205 

5206 

5207 


Digest 
Section. 


39 

41 

66 

67 

68 

60 

61 

63 

64 

65 

66 

67 

68 

22 

23 

24 

70 

71 

73 

74 

77 

79 

80 

81 

82 

167 

83 

84 

105 

106 

108 

85 

111 

112 

113 

114 

115 

116 

117 

118 

119 

120 

121 

168 


Page. 


69 

70 

78 

78 

79 

80 

80 

82 

82 

82 

83 

83 

84 

35 

36 

36 

87 

87 

87 

88 

88 

89 

90 

91 

91 

176 

91 

92 

104 

105 

106 

92 

108 

108 

111 

117 

118 

120 

122 

122 

123 

124 

125 

177 


U.  S. 
Revised 
Statute 
Section. 


5208., 
5209.. 
5210.. 
5211., 
5212.. 
5213.. 
5214.. 
5215., 
5216.. 
5217.. 
5218.. 
5219.. 
5220., 
5221., 
5222., 
5224., 
5225. 
5226. 
5227. 
5228. 
5229. 
5230. 
5231. 
5232. 
5233. 
5234. 
5235. 
5236. 
5237. 
5238. 
5239. 
5240. 
5241. 
5242. 
5243. 
5413. 
5415. 
5430. 
5431. 
5432. 
5433. 
5434. 
5437. 
5497. 


Digest 
Section. 


172 
169 
123 
124 
125 
127 
133 
135 
136 
137 
138 
147 
151 
152 

91 

92 

93 

94 

95 

96 

97 

98 

99 
102 
103 
154-156 
157 
158 
159 
160 
165 
130 
131 
166-182 
132 
171 
172 
173 
174 
175 
176 
177 
178 
179 


Page. 


126 
177 
126 
127 
127 
128 
133 
134 
135 
135 
135 
139 
150 
153 
97 
98 
98 
99 
100 
100 
100 
101 
101 
102 
102 
154-1^ 
161 
162 
164 
165 
169 
130 
131 
171-194 
131 
185 
186 
187 
187 
188 
188 
188 
189 
189 


XXV 


ADDITIONAL  ACTS. 


ACTS  OF  CONGRESS. 


June  20,  1874. 

«  a  a 


(( 
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it 
it 


it 
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it 


23, 
January  14, 1875.. 

"        19'     " 
February  18, 1875. 
June  30,  1876 


it 
it 
it 
it 
it 


it 
ft 
it 
it 
it 


it 

a 
tt 

it 


March  1,1879 

February  14, 1880. 

"         26, 1881. 

July  12,  1882 


a 
it 
ii 
it 
tt 
it 
tt 
tt 
it 


it 
it 
it 
ft 
a 
it 
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tt 
tt 


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it 
ii 
ft 
ft 
it 
it 
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it 


March  29,  1886. 
it        if       i( 


it 


it 


May  1,1886, 

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a 


a 


it 
a 


July  30,  1886.. 
March  3, 1887. 


ii 
it 


it 


ti 


it 


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August  13, 1888. 

May  2, 1890 

July  14, 1890 

May  12,  1892.... 

July  28, 1892 

August  13,  1894. 
March  2, 1897  .. 
March  14,  1900.. 


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3,  1901 


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April  12,  1902. 
July  1,1902.... 
March  3,1903. 

xxvi 


Section 
of  Act. 


1 
2 
3 
4 
5 
1 
3 


1 
2 
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6 
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1 
2 
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5 
1 
1 
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3 
4 

17 
6 

1 
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10 
11 
12 
13 
21 


Digest 
Section. 


1 

107 
86-100 

88 

72 
104 

75 

76 
8 
155 
153 
164 
120 
129 
128 
139 

40 
126 

45 

47 

48 
49-180 

50 

90 

51 
59-101 

89 
170 
161 
162 
163 

25 

42 

43 

44 

52 
109 
110 
120 
126 
181 

53 

87 

54 

78 
148 
164 

18 

62 

69 
134 

55 

37 

46 
150 
109 


Page. 


1 

106 

93-101 

95 

87 

103 

88 

88 

4 

154 

154 

169 

124 

129 

129 

136 

70 

128 

72 

73 

73 

73-191 

74 

97 

76 

79-102 

96 

185 

165 

165 

166 

36 

70 

71 

71 

75 

107 

107 

124 

128 

191 

75 

94 

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89 

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169 

28 

81 

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72 

149 

107 


;   •  >■ 


PRATTS'  DIGEST 

PART  FIRST. 

THE  LAWS  RELATING  TO  NATIONAL  BANKS, 
WITH  ANNOTATIONS. 

.PO^^O* 

CHAPTEE   I. 


COMPTROLIEE  OF  THE  CUREENCY. 


Section  1.  Title  of  Act. 

2.  Bureau  of  Comptroller  of  the  Currency. 

3.  Comptroller  of  the  Currency. 

4.  Oath  and  Bond  of  Comptroller. 

5.  Deputy  Comptroller;  duties^  etc. 

6.  Clerks. 

7.  Interest  in  !N'ational  Banks  prohibited. 

8.  Seal  of  office. 

9.  OjBfices,  Vaults,  etc.,  for  Bureau. 

10.  Examination  of  Banks  in  District  of  Columbia. 

11.  Annual  Report  of  Comptroller. 

12.  When  Report  to  be  Printed. 

§  1.  Title  of  Act. — The  act  entitled  ^'An  act  to  provide  a 
National  currency  secured  by  a  pledge  of  United  States  bonds, 
and  to  provide  for  the  circulation  and  redemption  thereof,"  ap- 
proved June  third,  eighteen  hundred  and  sixty-four,  shall  here- 
after be  known  as  the  "  National  Bank  Act.''  (Act  June  20, 
1874,  Ch.  343,  Sec.  1,  18  U.  S.  Stat.  123.) 

1 


*>2  >     . 


§  2.  Bureau  of  Comptroller  of  the  Currency. — There  shall  be 
in  the  Department  of  the  Treasury  a  Bureau  charged  with  the 
execution  of  all  laws  passed  by  Congress  relating  to  the  issue  and 
regulation  of  a  National  currency  secured  by  United  States  bonds ; 
the  chief  officer  of  which  Bureau  shall  be  called  the  Comptroller 
of  the  Currency,  and  shall  perform  his  duties  under  the  general 
direction  of  the  Secretary  of  the  Treasury.  (Eev.  Stat.  U.  S. 
Sec.  324.)  ' 

Wliile  the  construction  of  the  National  Bank  Act  by  the  Comptroller 
of  the  Currency  is  persuasive,  and  entitled  to  careful  consideration, 
yet  a  court,  if  satisfied  that  such  construction  is  error,  will  not  follow 
it.  (Deweese  v.  Smith,  106  Fed.  Rep.  438.)  And  where  the  meaning 
of  the  Act  is  clear,  the  construction  placed  thereon  by  the  Comptroller 
cannot  be  considered.    (Studebaker  vs.  Perrin,  184  U.  S.,  252.) 

§  3  Comptroller  of  the  Currency — Appointment — ^Term  of  OfBce 
— Salary. — The  Comptroller  of  the  Currency  shall  be  appointed  by 
the  President,  on  the  recommendation  of  the  Secretary  of  the 
Treasury,  by  and  with  the  advice  and  consent  of  the  Senate,  and 
shall  hold  his  office  for  the  term  of  five  years  unless  sooner  re- 
moved by  the  President,  upon  reasons  to  be  communicated  by  him 
to  the  Senate;  and  he  shall  be  entitled  to  a  salary  of  five  thousand 
dollars  a  year.     (Eev.  Stat.  U.  S.  Sec.  325.) 

The  Comptroller  of  the  Currency  is  also  ex  officio  Commissioner  of 
the  Freedmen's  Savings  Bank,  and  for  this  receives  an  additional 
11,000  per  annum. 

§  4.  Oath  and  Bond  of  Comptroller. — The  Comptroller  of  the 
Currency  shall,  within  fifteen  days  from  the  time  of  notice  of 
his  appointment,  take  and  subscribe  the  oath  of  office;  and  he 
shall  give  to  the  United  States  a  bond  in  the  penalty  of  one  hun- 
dred thousand  dollars,  with  not  less  than  two  responsible  sureties, 
to  be  approved  by  the  Secretary  of  the  Treasury,  conditioned  for 
the  faithful  discharge  of  the  duties  of  his  office.  (Eev.  Stat.  U. 
S.  Sec.  326.) 

The  Bond  of  a  Surety  Company  is  now  accepted. 


§  5.  Deputy  Comptroller:  Duties,  etc. — There  shall  be  in  the 
Bureau  of  the  Comptroller  of  the  Currency  a  Deputy  Comp- 
troller of  the  Currency,  to  be  appointed  by  the  Secretary,  who 
shall  be  entitled  to  a  salary  of  two  thousand  five  hundred  dollars 
a  year,  and  who  shall  possess  the  power  and  perform  the  duties 
attached  by  law  to  the  ofiice  of  Comptroller  during  a  vacancy  in 
the  office  or  during  the  absence  or  inability  of  the  Comptroller. 
The  Deputy  Comptroller  shall  also  take  the  oath  of  office  pre- 
scribed by  the  Constitution  and  laws  of  the  United  States,  and 
shall  give  a  like  bond  in  the  penalty  of  fifty  thousand  dollars. 
(Eev.  Stat.  U.  S.  Sec.  327.) 

Salary  increased  to  $3,500  by  act  of  Congress. 

The  court  will  take  judicial  notice  of  the  fact  that  a  certain  person 
was  on  a  certain  day  the  Deputy  Comptroller  of  the  Currency;  and 
where  he  has  signed  a  certificate  as  "  Acting  Comptroller "  the  court 
will  assume  that  at  the  date  of  such  certificate  he  was  authorized 
to  exercise  the  powers  and  discharge  the  duties  of  Comptroller. 
(Keyser  v.  Hitz,  133  U.  S.,  438.) 


§  6.  Clerks. — The  Comptroller  of  the  Currency  shall  employ, 
from  time  to  time,  the  necessary  clerks,  to  be  appointed  and  clas- 
sified by  the  Secretary  of  the  Treasury,  to  discharge  such  duties 
as  the  Comptroller  shall  direct.     (Eev.  Stat.  U.  S.  Sec.  328.) 

While  this  section  retains  the  appointing  power  in  the  hands  of  the 
Secretary  of  the  Treasury,  it  appears  to  indicate  that  the  Comptroller 
Is  to  be  the  judge  of  the  force  necessary  to  perform  the  work  of  his  office. 


§  7.  Interest  in  National  Banks  Prohibited.— It  shall  not  be 
lawful  for  the  Comptroller  or  the  Deputy  Comptroller  of  the 
Currency,  either  directly  or  indirectly,  to  be  interested  in  any  as- 
sociation issuing  National  currency  under  the  laws  of  the  United 
States.     (Rev.  Stat.  TJ.  S.  Sec.  329.) 

This  section  is  not  to  be  taken  in  its  strict  literal  sense,  but  is  to 
be  construed  so  as  to  carry  out  the  obvious  intention  of  Congress,  which 
was  to  forbid  the  Comptroller  and  the  Deputy  Comptroller  from  having 
any  interest  in  the  banks  over  which  they  are  to  exercise  a  supervision. 


§  8.  Seal  of  Office. — The  seal  devised  by  the  Comptroller  of  the 
Currency  for  his  office,  and  approved  by  the  Secretary  of  the 
Treasury,  shall  continue  to  be  the  seal  of  office  of  the  Comptroller, 
and  may  be  renewed  when  necessary.  A  description  of  the  seal, 
with  an  impression  thereof,  and  a  certificate  of  approval  by  the 
Secretary  of  the  Treasury,  shall  be  filed  in  the  office  of  the  Sec- 
retary of  State.  (Rev.  Stat.  U.  S.  Sec.  330  as  amended  by  Act, 
Feb.  18,  1875,  correcting  Rev.  Stat.) 


§  9.  Offices,  Vaults,  etc.,  for  Bnrean. — There  shall  be  assigned 
from  time  to  time,  to  the  Comptroller  of  the  Currency,  by  the 
Secretary  of  the  Treasury,  suitable  rooms  in  the  Treasury  build- 
ing for  conducting  the  business  of  the  Currency  Bureau,  con- 
taining safe  and  secure  fire-proof  vaults,  in  which  the  Comptroller 
shall  deposit  and  safely  keep  all  the  plates  not  necessarily  in  the 
possession  of  engravers  or  printers,  and  other  valuable  things  be- 
longing to  his  Department;  and  the  Comptroller  shall  from  time 
to  time  furnish  the  necessary  furniture,  stationery,  fuel,  lights, 
and  other  proper  conveniences  for  the  transaction  of  the  business 
of  his  office.     (Rev.  Stat.  U.  S.  Sec.  331.) 


f       §  10.  Examination  of  Banks  in  District  of  Columbia. — The 

Comptroller  of  the  Currency,  in  addition  to  the  powers  conferred 
upon  him  by  law  for  the  examination  of  National  banks,  is 
further  authorized,  whenever  he  may  deem  it  useful,  to  cause  ex- 
amination to  be  made  into  the  condition  of  any  bank  in  the  Dis- 
trict of  Columbia  organized  under  act  of  Congress.  The  Comp- 
troller, at  his  discretion,  may  report  to  Congress  the  results  of 
such  examination.  The  expense  necessarily  incurred  in  any  such 
examination  shall  be  paid  out  of  any  appropriation  made  by  Con- 
gress for  special  bank  examinations.     (Rev.  Stat.  U.  S.  Sec.  332.) 


§  11.  Annnal  Report  of  Comptroller. — The  Comptroller  of  the 
Currency  shall  make  an  annual  report  to  Congress,  at  the  com- 
mencement of  its  session,  exhibiting — 


Firsi,  A  summary  of  the  state  and  condition  of  every  associa- 
tion from  which  reports  have  been  received  the  preceding  year,  at 
the  several  dates  to  which  such  reports  refer,  with  an  abstract  of 
the  whole  amount  of  banking  capital  returned  by  them,  of  the 
whole  amount  of  their  debts  and  liabilities,  the  amount  of  circu- 
lating notes  outstanding,  and  the  total  amount  of  means  and 
resources,  specifying  the  amount  of  lawful  money  held  by  them 
at  the  times  of  their  several  returns,  and  such  other  information  in 
relation  to  such  associations  as,  in  his  judgment,  may  be  useful. 

Second.  A  statement  of  the  associations  whose  business  has  been 
closed  during  the  year,  with  the  amount  of  their  circulation  re- 
deemed and  the  amount  outstanding. 

Third,  Any  amendment  to  the  laws  relative  to  banking  by 
which  the  system  may  be  improved  and  the  security  of  the  holders 
of  its  notes  and  other  creditors  may  be  increased. 

Fourth.  A  statement  exhibiting  under  appropriate  heads  the 
resources  and  liabilities  and  condition  of  the  banks,  banking  com- 
panies, and  savings  banks  organized  under  the  laws  of  the  several 
States  and  Territories;  such  information  to  be  obtained  by  the 
Comptroller  from  the  reports  made  by  such  banks,  banking  com- 
panies, and  savings  banks  to  the  legislatures  or  officers  of  the  differ- 
ent States  and  Territories,  and,  where  such  reports  can  not  be  ob- 
tained, the  deficiency  to  be  supplied  from  such  other  authentic 
sources  as  may  be  available. 

Fifth.  The  names  and  compensation  of  the  clerks  employed  by 
him,  andthe  whole  amount  of  the  expense  of  the  banking  de- 
partment during  the  year.     (Eev.  Stat.  TJ.  S.  Sec.  333.) 

The  reports  of  heads  of  Departments  are  made  to  the  President  of 
the  United  States;  the  only  exception  is  that  of  the  Secretary  of  the 
Treasury,  which  is  made  direct  to  Congress.  The  reports  of  heads  of 
bureaus  in  any  Department  are  made  to  the  head  of  that  Department, 
but  the  Comptroller  of  the  Currency,  as  seen  above,  reports  direct  to 
Congress,  and  not  through  the  President  or  the  Secretary  of  the 
Treasury. 

The  first  report  of  the  Comptroller  of  the  Currency  was  made  for 
the  year  1863  by  the  Hon.  Hugh  McCulloch,  the  first  Comptroller. 
The  earlier  reports  are  out  of  print,  and  those  of  some  of  the  later 
years  also,  but  copies  of  such  as  are  on  hand  and  can  be  spared  may 
be  obtained  on  application  to  the  Comptroller  of  the  Currency  by 
bankers  and  others  who  are  interested  in  banking  matters. 


§  12.  When  Eeport  to  be  Printed. — When  the  annual  report  of 
the  Comptroller  of  the  Currency  upon  the  National  banks  and  banks 
under  State  and  Territorial  laws  is  completed,  or  while  it  is  in 
progress  of  completion,  if  thereby  the  business  may  be  sooner  dis- 
patched, the  work  of  printing  shall  be  commenced,  under  the  super- 
intendence of  the  Secretary,  and  the  whole  shall  be  printed  and 
ready  for  delivery  on  or  before  the  1st  day  of  December  next  after 
the  close  of  the  year  to  which  the  report  relates.  (Rev.  Stat.  U.  S. 
Sec.  3811.) 

By  Act  January  12,  1895,  Ch.  23  (28  Stat.  U.  S.  616),  It  is  provided 
that  there  shall  be  printed  each  year  ten  thousand  copies  of  the  Re- 
port of  the  Comptroller  of  the  Currency,  one  thousand  for  the  Senate, 
two  thousand  for  the  House,  and  seven  thousand  for  distribution  by 
the  Comptroller. 


CHAPTER   II. 

Organization  and  Powers  of  National  Banks. 

Section  13.  Who  May  Form  National  Banking  Association — Ar- 
ticles of  Association. 

14.  Organization  Certificate. 

15.  Acknowlegment  of   Organization  Certificate. 

16.  Corporate  Powers  of  Associations. 

17.  Limitations  as  to  Real  Estate  and  Mortgages. 

18.  Amount  of  Capital  Required. 

19.  Par    Value    of     Stock  —  Transfers  —  Stockholders' 

Rights  and  Liabilities. 

20.  When  Capital  Stock  Must  be  Paid  In. 

21.  Failure  to  Pay  Installments  on  Stock — Sale  of  Stock 

— Restoring  Capital  so  Reduced. 

22.  Comptroller  to  Determine  if  Association  is  Entitled 

to  Commence  Business. 

23.  Certificate  of  Authority  to  Commence  Business. 

24.  Publication  of  Comptroller's  Certificate. 

25.  Increase  of  Capital  Stock. 

26.  When  Increase  of  Capital  Stock  Becomes  Valid. 

27.  Reduction  of  Capital  Stock. 

28.  Rights  of  Shareholders  at  Elections — Proxies. 

29.  Directors — Election   of — Term   of   Office. 

30.  Qualifications  of  Directors. 

31.  Oath  Required  of  Directors. 

32.  Vacancies — How  Filled. 

33.  Proceedings  where  No  Election  is  Held  at  Time  Ap- 

pointed. 

34.  President  must  be  a  Director. 

35.  Individual  Liability  of  Shareholders. 

36.  Executors,  Trustees,  etc.,  not  Personally  Liable. 

37.  Depositaries  of  Public  Moneys. 

38.  Conversion  of  State  into  National  Banks. 

39.  Same  Subject — State  Banks  having  Branches. 

40.  Conversion  of  National  Gold  Banks. 

41.  Rights  of  Associations  Organized  under  Act  of  1863. 
3  7 


8 

43.  Change  of  !N"aine  and  Location. 

43.  Same  Subject — Continuance  of  Liabilities. 

44.  Same  Subject. 

45.  Extension  of  Corporate  Existence. 

46.  Same  Subject — Further  Extension. 

47.  Same  Subject — How  Articles  of  Association  Amended. 

48.  Same    Subject — Special    Examination   of   Extended 

Bank — Certificate  of  Comptroller. 

49.  Privileges,  Liabilities,  etc.,  of  Extended  Banks. 

50.  Withdrawal   of   Shareholders;   Preference  in  Allot- 

ment. 

51.  Banks  not  Extending — Continuance  of  Franchise  for 

Purpose  of  Liquidation. 

52.  Limitation  of  Banking  Under  Territorial  Law. 

53.  National  Banks  in  Oklahoma. 

54.  Branch  Banks  at  Columbian  Exposition. 

55.  Branch  Banks  at  Louisiana  Purchase  Exposition. 

§  13.  Wlio  May  Form  National  Banking  Associations — Articles 
of  Association. — Associations  for  carrying  on  the  business  of  bank- 
ing under  this  Title  may  be  formed  by  any  number  of  natural  per- 
sons, not  less  in  any  case  than  five.  They  shall  enter  into  articles 
of  association,  which  shall  specify  in  general  terms  the  object  for 
which  the  association  is  formed,  and  may  contain  any  other  pro- 
visions, not  inconsistent  with  law,  which  the  association  may  see  fit 
to  adopt  for  the  regulation  of  its  business  and  the  conduct  of  its 
affairs.  These  articles  shall  be  signed  by  the  persons  uniting  to 
form  the  association,  and  a  copy  of  them  shall  be  forwarded  to  the 
Comptroller  of  the  Currency,  to  be  filed  and  preserved  in  his 
ofiice.     (Rev.  Stat.  TJ.  S.  Sec.  5133.) 

For  full  details  how  to  proceed  In  the  organization  of  a  National 
Bank,  with  form  of  articles  of  association,  etc.,  see  page  201. 

§  14.  Organization  Certificate. — ^The  persons  uniting  to  form 
such  an  association  shall,  under  their  hands,  make  an  organization 
certificate,  which  shall  specifically  state : 

First.  The  name  assumed  by  such  association ;  which  name  shall 
be  subject  to  the  approval  of  the  Comptroller  of  the  Currency. 


9 

Second.  The  place  where  its  operations  of  discount  and  deposits 
are  to  be  carried  on,  designating  the  State,  Territory,  or  district, 
and  the  particular  county  and  city,  town,  or  village. 

Third,  The  amount  of  capital  stock  and  the  number  of  shares 
into  which  the  same  is  to  be  divided. 

Fourth,  The  names  and  places  of  residence  of  the  shareholders 
and  the  number  of  shares  held  by  each  of  them. 

Fifth.  The  fact  that  the  certificate  is   made  to  enable  such 

persons  to  avail  themselves  of  the  advantages  of  this  Title.     (Kev. 

Stat.  U.  S.  Sec.  5134.) 

Place  of  Location — ^How  Designated — Branches. — The  provision  of 
law  requiring  that  the  place  where  the  business  is  to  be  carried  on  shall 
be  stated  in  the  organization  certificate  refers  to  the  town  or  city,  and 
not  to  the  particular  building  or  street  number.  (McCormick  v.  Market 
Nat.  Bank  of  Chicago,  162  111.,  100.)  The  Comptroller  of  the  Currency 
holds  that  the  legal  residence  of  the  bank  is  the  particular  location, 
that  is,  the  street  and  number  in  the  place  designated  in  its  organiza- 
tion certificate,  or  in  case  of  removal  its  new  location,  and  therefore 
that  it  can  not  have  branches  in  the  same  city. 

§  15.  Acknowledgment  of  Organization  Certificate. — The  or- 
ganization certificate  shall  be  acknowledged  before  a  judge  of  some 
court  of  record,  or  notary  public;  and  shall  be,  together  with  the 
acknowledgment  thereof,  authenticated  by  the  seal  of  such  court,  or 
notary,  transmitted  to  the  Comptroller  of  the  Currency,  who  shall 
record  and  carefully  preserve  the  same  in  his  office.  (Eev.  Stat.  TJ. 
S.  Sec.  5135.) 

For  form  of  certificate  see  page  215. 

§  16.  Corporate  Powers  of  Associations. — Upon  duly  making 
and  filing  articles  of  association  and  an  organization  certificate, 
the  association  shall  become,  as  from  the  date  of  the  execution  of 
its  organization  certificate,  a  body  corporate,  and  as  such,  and  in 
the  name  designated  in  the  organization  certificate,  it  shall  have 
power — 

First.  To  adopt  and  use  a  corporate  seal. 

Second.  To  have  succession  for  the  period  of  twenty  jears  from 
its  organization,  unless  it  is  sooner  dissolved  according  to  the 
provisions  of  its  articles  of  association,  or  by  the  act  of  its  share- 
holders owning  two-thirds  of  its  stock,  or  unless  its  franchise 
becomes  forfeited  by  some  violation  of  law. 


10 

Third.  To  make  contracts. 

Fourth.  To  sue  and  be  sued,  complain  and  defend;,  in  any  court 
of  law  and   (or)   equity,  as  fully  as  natural  persons. 

Fifth.  To  elect  or  appoint  directors,  and  by  its  board  of  direc- 
tors to  appoint  a  president,  vice-president,  cashier,  and  other 
officers,  define  their  duties,  require  bonds  of  them  and  fix  the 
penalty  thereof,  dismiss  such  officers  or  any  of  them  at  pleasure,  and 
appoint  others  to  fill  tHeir  places. 

Sixth.  To  prescribe,  by  its  board  of  directors,  b^-laws  not  in- 
consistent with  law,  regulating  the  manner  in  which  its  stock 
shall  be  transferred,  its  directors  elected  or  appointed,  its  of- 
ficers appointed,  its  property  transferred,  its  general  business 
conducted,  and  the  privileges  granted  to  it  by  law  exercised  and 
enjoyed. 

Seventh.  To  exercise  by  its  board  of  directors,  or  duly  author- 
ized officers  or  agents,  subject  to  law,  all  such  incidental  powers 
as  shall  be  necessary  to  carry  on  the  business  of  banking;  by  dis- 
counting and  negotiating  promissory  notes,  drafts,  bills  of  ex- 
change, and  other  evidences  of  debt;  by  receiving  deposits;  by 
buying  and  selling  exchange,  coin,  and  bullion;  by  loaning  money 
on  personal  security;  and  by  obtaining,  issuing,  and  circulating 
notes  according  to  the  provisions  of  this  Title. 

But  no  association  shall  transact  any  business  except  such  as 
is  incidental  and  necessarily  preliminary  to  its  organization  until 
it  has  been  authorized  by  the  Comptroller  of  the  Currency  to  com- 
mence the  business  of  banking.     (Kev.  Stat.  U.  S.  Sec.  5136.) 

Banking  Powers. — The  banking  powers  here  conferred  are  such  as 
banks  and  bankers  have  customarily  exercised.  The  enumeration  of 
powers  in  the  seventh  subdivision  is  the  usual  formula  descriptive  of 
the  banking  business  contained  in  bank  charters,  and  is  almost  identical, 
except  in  the  order  of  arrangement,  with  that  contained  in  the  New 
York  banking  act  of  1838,  which  is  the  original  model  upon  which  most 
of  the  banking  laws  of  the  country  have  been  framed.  The  powers  here 
specified  are  not  the  incidental,  but  the  principal  powers,  and  to  them 
are  to  be  superadded  all  incidental  powers.  While  the  statute  specifies 
the  main  things  a  National  bank  may  do,  it  does  not  undertake  to 
specify  all,  and  it  does  not  prohibit  all  not  specified.  For  instance,  the 
business  of  making  collections,  which  forms  a  large  branch  of  the  bank- 
ing business,  is  not  particularly  specified,  but  it  has  never  been  doubted 
that  the  National  banks  have  the  right  and  power  to  do  this  kind  of 


11 

business.  In  general.  National  banks  may  make  any  contracts  which 
legitimately  appertain  to  the  business  of  banking,  as  defined  by  the 
statute.  (Pattison  v.  Syracuse  National  Bank,  80  N.  Y.,  82.)  But  such 
banks  can  exercise  only  the  powers  expressly  enumerated  in  the  statute, 
and  those  powers  which  are  properly  incidental  to  the  enumerated 
powers.  (Logan  County  National  Bank  v.  Townsend,  139  U.  S.,  67,  73; 
Casey  v.  La  Society  de  Credit  Mobilier  de  Paris,  2  Woods,  77.) 

Deposits. — The  authority  given  National  banks  to  receive  deposits 
also  includes  power  to  contract  as  to  the  parties  to  whom  deposits 
shall  be  repaid.  (Sykes  v.  Canton  First  National  Bank,  2  S.  D.,  242.) 
A  National  bank  may  be  a  depositary  for  the  public  money  of  a  city; 
and  may  agree  to  pay  interest  on  such  deposits,  and  give  bond  for  their 
security.     (Interstate  National  Bank  v.  Ferguson,  48  Kans.,  732.) 

Special  Deposit. — It  is  also  well  settled  that  National  banks  may  not 
only  receive  deposits  made  in  the  usual  way,  which  are  known  as  general 
deposits,  but  they  may  likewise  receive  special  deposits.  They  may 
receive  deposits  of  bonds  and  securities  for  safe-keeping,  either  for  a 
compensation  or  gratuitously.  (National  Bank  v.  Graham,  100  U.  S., 
699;  Pattison  v.  Syracuse  National  Bank,  80  N.  Y.,  82;  First  National 
Bank  v.  Strang,  138  111.,  347.)  This  power  has  been  sustained  upon  two 
grounds — first,  that  it  is  incidental  to  the  business  of  banking;  and, 
secondly,  that  it  is  implied  in  the  provisions  of  section  5228,  Revised 
Statutes,  which  authorizes  an  insolvent  association  to  deliver  special 
deposits. 

But  the  cashier  or  other  executive  officer  has  no  authority  to  bind  the 
bank  by  the  receipt  of  a  special  deposit  for  safe-keeping,  without  an  ex- 
press or  implied  authority  from  the  directors.  (First  National  Bank 
of  Lynn  v.  Ocean  National  Bank,  60  N.  Y.,  278.  See  also  Wiley  v.  First 
National  Bank  of  Brattleboro,  47  Vt,  546.)  However,  where  the  bank 
habitually  receives  special  deposits  through  its  cashier,  it  will  be 
bound  by  his  acts  in  receiving  the  same.  (Pattison  v.  Syracuse  National 
Bank,  80  N.  Y.,  82,  92;  Chattahoochee  National  Bank  v.  Schley,  58  Ga.. 
360.)  And  where  a  special  deposit  is  lost  through  the  negligence  of  the 
officers  or  employees  of  the  bank,  the  bank  will  be  liable  to  the  owner  of 
the  deposit.  (National  Bank  v.  Graham,  100  U.  S.,  699.)  Where  a 
special  deposit  made  with  a  bank,  afterwards  reorganized  as  a  National 
bank,  is  converted,  the  measure  of  the  damage  is  the  value  of  the 
deposit  at  the  date  of  the  conversion.  (Coffey  v.  National  Bank  of  Mis- 
souri, 46  Mo.,  140.)  Where  a  National  bank  receives  United  States 
bonds  of  one  class  for  the  purpose  of  having  them  converted  into  bonds 
of  another  class,  it  is  not  a  mere  mandatary,  but  is  responsible  for  the 
failure  to  deliver  the  bonds  on  demand.  (Leach  v.  Hale,  31  Iowa,  69.) 
It  is  competent  for  a  National  bank  to  take  steps  for  the  recovery  of  its 
property  stolen  by  burglars,  and  to  agree  to  take  like  steps  for  the  re- 


12 

covery  of  the  property  of  others  deposited  with  it  for  safe-keeping  and 
stolen  at  the  same  time,  and  want  of  proper  diligence,  skill  and  care  in 
performing  such  an  undertaking  is  ground  of  liability  to  respond  in 
damages  for  failure.     (Wylie  v.  Northampton  Bank,  119  U.  S.,  361.) 

Deposit  as  Stakeholder. — A  National  bank  may  receive  the  deposit 
of  a  fund  in  controversy  to  abide  the  event  of  a  litigation  or  award,  or 
to  be  payable  upon  a  contingency  to  some  person  other  than  the  de- 
positor. So  long  as  the  bank  undertakes  nothing  more  than  to  pay  over 
the  money  deposited  with  it  to  the  person  who  may,  according  to  the 
conditions  upon  which  the  deposit  was  made,  become  entitled  to  receive 
it,  the  bank  does  not  transcend  its  powers.  Nor  does  it  make  any  differ- 
ence that  the  portion  of  the  sum  deposited  which  may  become  payable 
to  a  third  person  is,  at  the  time  of  the  deposit,  uncertain  and  subject  to 
litigation.  (Bushnell  v.  Chautauqua  County  National  Bank,  74  N.  Y., 
290.) 

Savings  DepaetmenT. — A  National  bank  may  have  a  Savings  Depart- 
ment, entering  on  pass-books  the  deposits  and  withdrawals,  paying  in- 
terest on  deposits,  etc.,  and  operating  in  every  way  as  a  savings  bank, 
excepting  first,  a  special  contract  is  necessary  and  should  be  entered 
in  pass-books,  providing  as  to  withdrawal  of  funds,  otherwise  deposits 
are  payable  on  demand,  as  other  deposits  of  a  National  bank;  second, 
loans  as  to  amount  to  individuals  and  character  of  security  must  con- 
form to  the  provisions  of  the  National  Bank  Act. 

A  National  bank  proposing  to  operate  a  savings  bank  under  a  sepa- 
rate charter  to  avoid  the  restrictions  of  the  National  Bank  Act  should 
not  establish  it  in  the  same  building.  In  several  States  this  is  pro- 
hibited by  statute,  in  the  interests  of  savings  banks,  to  protect  them 
aganst  possible  manipulation  of  funds  to  relieve  depleted  condition  of 
the  State  or  National  bank  with  which  it  is  connected.  Again  on  account 
of  the  sensitiveness  of  savings  deposits,  the  danger  of  the  National 
bank  suffering  in  time  of  financial  crises,  is,  generally  increased  if  the 
two  banks  are  evidently  one  and  the  same  institution. 


Safe  Deposit  Boxes. — The  Comptroller  of  the  Currency  holds  that 
while  there  is  no  provision  of  the  statute  authorizing  National  banks  to 
invest  considerable  sums  in  the  building  of  safe  deposit  vaults  for  the 
purpose  of  makng  that  a  prominent  feature  of  their  business,  yet  the 
investment  of  a  moderate  amount  for  such  purpose  in  cities  where 
companies  can  not  be  properly  organized  for  the  sole  purpose  of  con- 
ducting this  line  of  business  is  not  open  to  criticism.  The  Comptroller 
adopts  the  view  that  the  matter  is  one  largely  in  the  discretion  of  the 
directors  of  the  bank. 


13 

Secubity  for  Loans. — The  words  "  loans  on  personal  security  "  in  the 
statute  are  used  in  contradistinction  to  real  estate  security,  and  the 
National  banks  are  not  confined,  in  the  taking  of  security  for  discounts 
and  loans,  to  the  security  afforded  by  the  names  of  indorsers  or  personal 
sureties,  but  may  take  a  pledge  of  bonds,  choses  in  action,  bills  of 
lading,  or  other  personal  chattels.  It  has  accordingly  been  held  that 
they  may  take  for  this  purpose  a  pledge  of  the  stock  of  a  corporation 
(Shoemaker  v.  National  Mechanics'  Bank,  2  Abb.,  U.  S.,  416;  see  also 
National  bank  v.  Case,  96  U.  S.,  628);  or  a  warehouse  receipt  for  mer- 
chandise (Cleveland,  Brown  &  Co.  v.  Shoeman,  40  Ohio  St.,  176) ;  or  a 
locomotive  (Pittsburgh  Locomotive  and  Car  Works  v.  State  National 
Bank,  U.  S.  Circuit  Court,  1875;  Thompson's  National  Bank  Cases, 
315);  or  a  chattel  mortgage  upon  a  stock  of  goods  (Spofford  v.  First 
National  Bank  of  Tama  City,  37  Iowa,  181).  An  indorsement  of  a 
promissory  note  by  a  married  woman  by  its  terms  charging  her 
separate  estate  with  the  payment  of  the  note,  is  not  a  mortgage  in  any 
sense;  it  is  simply  a  personal  security  within  the  meaning  of  the  Na- 
tional Bank  Act,  and  is  therefore  a  security  which  a  National  bank 
may  take.  (Third  National  Bank  v.  Blake,  73  N.  Y.,  260.)  The  question 
of  loans  upon  real  estate  security  is  discussed  under  the  next  section. 

Dealing  in  Stocks  and  Bonds. — A  National  bank  has  no  power  to 
deal  in  stocks  and  bonds,  or  buy  and  sell  them  upon  commission.  Such 
operations  are  not  incidental  to  the  business  of  banking  as  defined  in 
the  statute.  (Weckler  v.  First  National  Bank  of  Hagerstown,  42  Md., 
581;  First  National  Bank  of  Allentown  v.  Hock,  89  Pa.  St.,  324;  First 
National  Bank  v.  National  Exchange  Bank,  92  U.  S.,  122.)  And 
the  prohibition  is  implied  from  the  failure  to  grant  the  power.  (Cali- 
fornia National  Bank  v.  Kennedy,  167  U.  S.,  362.)  But  there  seems  to 
be  good  reason  for  saying  that  a  different  rule  applies  in  respect  to 
Government  Bonds.  It  has  always  been  the  custom  of  the  National 
banks  to  deal  more  or  less  in  these  securities,  and  such  operations  have 
been  generally  encouraged  by  the  fiscal  oflicers  of  the  Government.  It 
is  clear  that,  as  financial  agents  of  the  Government,  they  may  be  em- 
ployed by  the  Government  to  perform  any  duties  in  respect  to  its  bonds; 
and  so,  perhaps,  they  may  be  employed  in  this  way  by  others.  It  has 
long  been  the  practice  of  bankers,  both  in  this  country  and  in  England, 
to  buy  and  sell  and  exchange  Government  securities  for  their  customers, 
and  as  it  was  the  policy  of  the  Government  to  encourage  the  purchase 
and  sale  of  its  bonds,  and  facilitate  transactions  in  them^  it  is  not 
probable  that  Congress  intended  to  prohibit  National  banks,  the  most 
numerous  class  of  financial  agents  in  the  country,  from  dealing  in  these 
bonds  in  a  manner  usual  among  bankers  and  banking  institutions. 
It  has  been  decided  by  State  courts  of  high  authority  that  the  National 
banks  have  power  to  receive  United  States  bonds  of  one  class  for  the 
purpose  of  having  them  converted  into  bonds  of  another  class,  and  that 


14 

the  exchanging  of  Government  securities  is  a  legitimate  part  of  their 
business.  (Yerkes  v.  National  Bank  of  Port  Jervis,  69  N.  Y.,  383;  Van 
Lenven  v.  First  National  Bank,  54  N.  Y.,  671;  Leach  v.  Hale,  31  Iowa, 
69.)  In  the  case  first  cited  it  was  said:  "  We  may  take  judicial  notice  of 
the  fact  that  Government  bonds  are  usually  bought  and  sold  through 
banks,  and  that  all  the  transactions  in  reference  to  them  with  the  Gov- 
ernment are  usually  conducted  through  banks  and  persons  doing  banking 
business."  And  it  has  been  held  that  a  National  bank  has  power  to  deal 
in  municipal  bonds,  and  may  make  a  contract  with  a  municipal  corpora- 
tion for  the  purchase  of  its  bonds.  (Newport  National  Bank  v.  Board  of 
Education  of  Newport,  Ky.,  705  W..  Rep.,  186;  24  Ky.  L.  Rep.,  876.) 
Where  the  president  of  a  National  bank  sells  bonds  which  are  the 
property  of  the  bank,  under  the  representation  that  they  were  bought  by 
him  expressly  for  the  purchaser,  the  latter,  upon  discovering  the  fact  re- 
specting the  bank's  ownership,  may  repudiate  the  transaction,  and  upon 
returning  the  bonds  to  the  bank  may  reclaim  the  money  paid  for  them. 
(Carr  v.  National  Bank  of  Watertown,  167  N.  Y.,  375.) 

Purchasing  Commebciajl  Paper. — It  has  been  held  by  the  highest 
%    courts  of  Maryland   (Lazear  v.  National  Union  Bank  of  Baltimore,  53 
I    Md.,  78)  and  Minnesota  (First  National  Bank  of  Rochester  v.  Pierson, 
24  Minn.,  140)  that  a  National  bank  has  no  power  to  purchase  com- 
mercial paper,  or  acquire  any  title  to  such  paper  by  a  purchase,  made 
admittedly  not  in  the  way  of  discount,  or  by  lending  money  on  the 
credit  of  it.    In  the  Maryland  case  it  was  said:  "  We  are  of  opinion  that 
this  transaction  was  an  out-and-out  purchase  by  the  bank,  and  that 
such  purchase  was  without  authority,  and  that  the  bank  acquired  no 
title  to  the  note,  and  can  not  recover  thereon  in  this  sujt.    While  we  do 
not  mean  to  say  that  a  National  bank  may  not  invest  its  surplus  capital 
in  notes,  we  are  of  opinion  that  it  has  no  authority  to  use  such  surplus 
funds,  as  may  remain  on  hand  from  day  to  day,  for  the  purpose  of  buy- 
ing notes."     The  contrary  has  been  held  by  the   Supreme  Court  of 
Ohio   (Smith  v.  Exchange  National  Bank  of  Pittsburgh,  26  Ohio  St., 
141),  though  it  was  said  by  that  court  that,  as  "in  the  business  of 
banking,  the  purchasing  and  discounting  of  paper  is  only  'a  mode  of 
loaning  money/  "  the  purchase  could  not  be  at  a  greater  rate  of  dis- 
count than  allowed  by  the  usury  laws.     This  view  seems  to  be  much 
preferable  to   that  taken   in   the  Maryland   and   Minnesota   cases,   in 
which  the  construction  placed  upon  the  law  appears  to  be  very  narrow. 
We  have  seen  that  a  National  bank  has,  in  general,  such  powers  as 
are  incident  to  the  banking  business,  and  the  purchase  and  sale  of  com- 
mercial paper  is  such  an  incident.     (Yerkes  v.  National  Bank  of  Port 
Jervis,  69  N.  Y.,  382.)    And  it  may  be  said,  upon  good  authority,  that  the 
word  "  discount,*^  when  properly  interpreted,  includes  a  purchase  as  well 
as  a  loan.    In  Atlantic  State  Bank  v.  Savery  (82  N.  Y.,  291),  the  Court 
of  Appeals  of  New  York,  in  considering  the  question  whether  a  bank 


15 

organized  under  the  New  York  banking  law  of  1838  could  purchase  a 
note,  cite,  with  approval  from  McLeod  on  Banking,  that  "  it  is  usual 
to  estimate  the  value  of  money  by  the  discount  or  profit  it  yields,  and 
to  buy  or  purchase  a  debt  is  always  in  commerce  termed  to  discount 
it;  "  and  from  the  case  of  Tracey  v.  Talmage  (18  Barb.,  456)  that  "to 
discount  includes  to  buy,  for  discounting,  at  most,  is  but  another  term 
for  buying  at  a  discount."  And  the  same  meaning  has  been  ascribed 
to  the  term  by  other  courts.  (Niagara  County  Bank  v.  Baker,  15  Ohio 
St.,  85;  Pape  v.  Capital  Bank  of  Topeka,  20  Kans.,  440.) 

In  the  Maryland  case  cited  it  was  held  that  the  bank  could  not  main- 
tain an  action  on  paper  which  it  had  acquired  by  purchase;  but,  in  later 
cases  in  other  States,  it  has  been  held  that  notwithstanding  the  bank, 
in  purchasing  the  paper,  was  acting  in  excess  of  its  power,  still  its 
want  of  power  in  that  respect  could  not  be  set  up  by  any  of  the  parties 
to  the  paper  when  sued  thereon,  and  that  it  is  only  for  the  Government 
to  complain  that  the  bank  had  exceeded  its  authority.  ( Fresco tt  Na- 
tional Bank  v.  Butler,  157  Mass.,  548;  Merchants'  National  Bank  v. 
Hanson,  33  Minn.,  40;  First  National  Bank  of  Pierre  v.  Smith,  8  S. 
Dakota,  7.)  The  latter  is,  no  doubt,  the  correct  view,  and  is  supported 
by  the  decisions  of  the  United  States  Supreme  Court  in  analogous  cases. 
(National  Bank  v.  Matthews,  98  U.  S.,  621;  National  Bank  v.  Whitney, 
103  U.  S.,  99;  Reynolds  v.  Crawfordsville  Bank,  112  U.  S.,  405;  Thomp- 
son V.  St.  Nicholas  National  Bank,  146  U.  S.,  240.) 

And  even  if  a  National  bank  does  not  get  the  legal  title  to  a  promis- 
sory note  bought  in  the  market,  it  may  maintain  a  suit  as  the  holder 
thereof.  (Prescott  National  Bank  of  Lowell  v.  Butler,  supra.)  In  the 
Kentucky  case  above  cited  it  was  held  that  the  purchase  of  a  note  from 
the  payee  with  the  latter's  endorsement  is  a  purchase  by  discounting  in 
the  usual  course  of  business,  and  is  not  a  purchase  by  barter  and  sale, 
as  would  be  the  case  if  the  note  were  taken  without  endorsement,  or  by 
endorsement  without  recourse.  So,  in  a  late  case  in  Missouri  it  was 
decided  that  the  receiving  of  notes  and  carrying  them  through  the 
bank  books  as  discounted  paper,  and  placing  the  face  value  as  the  pro- 
ceeds thereof  to  the  credit  as  cash  of  the  party  from  whom  they  were 
received,  constituted  a  discounting  or  negotiating  of  notes  within  the 
law,  although  the  interest  was  not  taken  in  advance  and  no  money  was 
actually  paid  on  them  at  the  time.  (EUerbee  v.  National  Exchange 
Bank,  107  Mo.,  445.) 

Borrowing  of  Money. — The  power  to  borrow  money  or  to  give  notes 
is  not  expressly  conferred  by  the  act;  but  in  proper  cases  a  bank  may 
become  a  temporary  borrower  of  money.  (Western  National  Bank  v. 
Armstrong,  152  U.  S.,  346;  Chemical  National  Bank  v.  Armstrong,  65 
Fed.  Rep.,  573.) 

But  such  transactions  are  so  much  outside  of  the  general  scope  of  the 
bank's  business,  that  the  oflBcer  acting  for  the  bank  therein  must  have 


I 


16 

special  authority.  (Id.)  The  vice-president,  even  though  he  is  the 
principal  executive  officer  of  the  bank,  has  no  implied  authority  to  bor- 
row large  sums  on  time.  (Id.)  And  where  an  officer  without  authority 
borrows  money  for  the  bank,  the  mere  fact  that  the  money  was  placed 
to  the  credit  of  the  bank  involves  no  ratification  of  his  act,  unless  the 
money  was  so  placed  with  the  bank's  consent;  and  the  withdrawal  of 
the  money  by  drafts  drawn  by  such  officer  in  the  name  of  the  bank 
will  not  constitute  a  receipt  of  such  money  by  the  bank,  unless  it  was, 
in  point  of  fact,  received  and  used  by  the  bank,  or  for  its  benefit.     (Id.) 

Rediscounts. — ^A  rediscount  by  a  National  bank  of  its  bills  receiv- 
able, though  it  endorses  the  same,  and  becomes  contingently  liable  for 
their  payment,  is  not  a  borrowing  of  money  by  the  bank,  but  has  some 
of  the  characteristics  of  a  sale.  (United  States  National  Bank  v.  First 
National  Bank  of  Little  Rock,  79  Fed.  Rep.,  296.)  And  such  a  transac- 
tion is  not  so  far  outside  the  scope  of  ordinary  banking  transactions 
as  to  impose  upon  the  bank  buying  such  paper  the  duty  of  ascertaining 
that  the  act  has  been  specially  authorized  by  the  board  of  direct- 
ors. (Id.)  And  when  a  bank  has  long  been  in  the  habit  of  re- 
discounting  its  bills  receivable  in  large  amounts,  all  other  banks 
in  the  same  locality  pursuing  the  same  practice,  and  the  president 
and  cashier  of  such  bank  proposes  to  its  regular  correspondent  a 
rediscount  of  such  bills,  and  there  are  no  circumstances  attending 
such  proposition  to  arouse  suspicion,  the  bank  to  which  it  is  made 
may  safely  act  upon  it,  without  further  inquiry,  on  the  assumption  that 
the  act  has  either  been  specially  authorized,  or  that  the  officers  are 
acting  within  the  purview  of  their  powers.  (Id.)  The  rule  announced 
In  Western  National  Bank  v.  Armstrong  (152  U.  S.,  346)  that  the 
vice-president  or  cashier  of  a  National  bank  has  no  power  to  borrow 
money  on  its  behalf  unless  specially  authorized  by  the  directors,  is  not 
applicable  in  a  case  where  a  general  and  long-established  usage  is  shown 
between  correspondent  banks,  prevailing  in  both  cities  where  the  lend- 
ing and  borrowing  banks  were  respectively  situated,  that  loaning  and 
borrowing  money  through  the  executive  officers  of  the  bank,  no  further 
authority  be  furnished  or  demanded;  the  presumption  being  that  such 
usage  was  condoned  and  acquiesced  in  by  the  directors  of  the  borrowing 
bank,  in  the  absence  of  notice  to  the  contrary  to  its  correspondent. 
(Armstrong  v.  Chemical  National  Bank,  83  Fed.  Rep.,  556.) 

And  in  a  recent  case  it  was  held  that  the  president  of  a  National 
bank  who  has  the  actual  management  of  its  operations  is  authorized 
to  procure  the  discount  of  its  paper.  (Hanover  National  Bank  v.  First 
National  Bank  of  Burlingame,  109  Fed.  Rep.,  421.)  In  this  case  a  New 
York  bank  discounted  a  note  made  by  the  president  of  a  Kansas  bank, 
and  paid  the  proceeds  to  the  last-mentioned  bank,  this  form  of  transac- 
tion having  been  adopted  at  the  request  of  the  president  of  such  bank, 
he  having  stated  that  he  did  not  wish  to  report  to  the  Comptroller  of  the 


17 

Currency  or  to  publish  the  fact  that  his  bank  was  procuring  redis- 
counts. Held,  That  the  knowledge  of  the  New  York  bank  of  his  inten- 
tion to  violate  the  National  Banking  Law  did  not  affect  its  rights  to  re- 
cover the  money  from  the  Kansas  bank.  The  subsequent  fraud  of  its 
cashier  will  not  relieve  a  National  bank  from  its  liability  as  indorser 
on  paper  transferred  by  him  within  the  scope  of  his  authority  to  an 
innocent  third  person.  (Auten  v.  Manistee  National  Bank,  67  Ark., 
243.) 

Stocks  Taken  as  Security  Fob  ob  In  Payment  of  Debts. — But 
while  the  National  banks  are  impliedly  prohibited  from  dealing  in 
stocks,  they  may  yet  accept  stock  when  it  is  transferred  to  them,  tona 
fide,  in  satisfaction  or  payment,  or  by  way  of  compromise  of  debts  due 
to  or  from  the  bank,  and  when  it  is  taken  with  a  view  to  its  subsequent 
sale  or  conversion  into  money  so  as  to  make  good  or  reduce  an  antici;- 
pated  loss.  This  right  grows  out  of  the  implied  power  to  adopt  rea- 
sonable and  appropriate  measures  to  secure  the  bank's  own  obligations, 
or  collect  or  secure  debts  due  to  it;  and  in  this  behalf  the  bank  may 
do  whatever  natural  persons  would  do  under  similar  circumstances. 
(First  National  Bank  of  Charleston  v.  National  Exchange  Bank,  92  U. 
S.,  122.)  And,  in  such  a  case,  if  the  stock  is  worth  more  than  the 
amount  of  the  claim,  the  bank  may  pay  the  difference.     {Id.) 

And  where  a  loan  has  been  made  upon  the  stock  of  another  corpora- 
tion as  collateral  security,  the  bank,  in  enforcing  its  rights  as  pledgee, 
may  become  the  owner  of  the  collateral.  (Fulton  v.  National  Bank  of 
Dennison,  26  Tex.  Civ.  App.,  115.) 

Where  a  National  bank  legally  acquires  title  to  stock  in  another  cor- 
poration, previously  held  as  collateral  security  or  taken  for  debt,  such 
stock  should  be. disposed  of  promptly,  and  that  action  will  be  required 
by  the  Comptroller  of  the  Currency  in  order  that  the  liability  attaching 
to  such  stock  may  be  definitely  determined,  as  neither  the  prior  owner, 
nor  the  National  bank  so  acquiring  the  stock,  is  liable  to  an  assessment 
in  case  of  impairment  of  capital  or  failure. 

Purchase  of  Stock  of  Other  National  Banks. — A  National  bank  can 
not  lawfully  acquire  and  hold  the  stock  of  another  National  bank  as  an 
investment.  (First  National  Bank  of  Concord  v.  Hawkins,  33  U.  S.  App., 
747.)  And  where  such  stock  has  been  purchased  the  bank  may  plead  its 
want  of  power  as  a  defense  to  an  assessment  upon  the  stock,  notwith- 
standing it  appears  as  the  registered  owner  thereof,  and  has  received 
and  retained  the  dividends  thereon.     {Id.) 

The  Court  in  this  case  said:  "We  think  that  the  reason  which  dis- 
qualify a  National  bank  from  investing  its  money  in  the  stock  of  an- 
other corporation  are  quite  as  obvious  when  that  other  corporation  is  a 
National  bank  as  in  the  case  of  other  corporations.  The  investment  by 
National  banks  of  their  surplus  funds  in  other  National  banks,  situated 


18 

perhaps  in  distant  States  as  in  the  present  case,  is  plainly  against  the 
meaning  and  policy  of  the  statutes  from  which  they  derive  their  powers, 
and  evil  consequences  would  be  certain  to  ensue  if  such  a  course  of 
conduct  were  countenanced  as  lawful.  Thus  it  is  enacted  in  Section 
5146  that  "  every  director  must,  during  his  whole  term  of  service,  be  a 
citizen  of  the  United  States,  and  at  least  three-fourths  of  the  directors 
must  have  resided  in  the  State,  Territory  or  district,  in  which  the  asso- 
ciation Is  located  for  at  least  one  year  immediately  preceding  their 
election,  and  must  be  residents  therein  during  their  continuance  in. 
office." 

"  One  of  the  evident  purposes  of  this  enactment  is  to  confine  the  man- 
agement of  each  bank  to  persons  who  live  in  the  neighborhood,  and  who 
may  for  that  reason  be  supposed  to  know  the  trustworthiness  of  those 
who  are  to  be  appointed  officers  of  the  bank,  and  the  character  and 
financial  ability  of  those  who  may  seek  to  borrow  its  money.  But  if  the 
funds  of  a  bank  in  New  Hampshire,  instead  of  being  retained  in  the 
custody  and  management  of  its  directors,  are  invested  in  the  stock  of  a 
bank  In  Indiana,  the  policy  of  this  wholesome  provision  of  the  statute 
would  be  frustrated.  The  property  of  the  local  stockholders,  so  far  as 
thus  invested,  would  not  be  managed  by  directors  of  their  own  se- 
lection, but  by  distant  and  unknown  persons.  Another  evil  that  might 
result,  if  large  and  wealthy  banks  were  permitted  to  buy  and  hold 
the  capital  stock  of  other  banks,  would  be  that  in  that  way  the  banking 
capital  of  a  community  might  be  concentrated  in  one  concern,  and  busi- 
ness men  be  deprived  of  the  advantages  that  attend  competition  be- 
tween banks.  Such  accumulation  of  capital  would  be  in  disregard  of 
the  policy  of  the  National  Banking  Law,  as  seen  in  its  numerous  pro- 
visions regulating  the  amount  of  the  capital  stock,  and  the  methods  to 
be  pursued  in  increasing  or  reducing  it.  The  smaller  banks  in  such  a 
case  would  l^e  in  fact,  though  not  in  form,  branches  of  the  larger  one." 

Lending  Ciiedit — ^Accommodation  Papek. — A  National  bank  has  no 
authority  to  lend  its  credit,  and  its  accommodation  paper  or  indorse- 
ment or  guaranty  will  be  void  in  the  hands  of  any  person  taking  the 
same  with  knowledge  of  the  facts.  (National  Bank  of  Commerce  v. 
Atkinson,  55  Fed.  Rep.,  465;  Seligman  v.  Charlottesville  National  Bank, 
3  Hughes,  647;  Johnson  v.  Charlottesville  National  Bank,  3  Hughes, 
657.)  This,  it  may  be  remarked,  is  true  of  all  corporations,  and  the 
principle  is  well  established  in  corporation  law. 

Guaranty. — A  National  bank  has  no  power  to  give  an  accommodation 
guaranty,  and  such  a  guaranty  is  not  enforceable  against  the  bank. 
(Bowen  v.  Needles  National  Bank,  94  Fed.  Rep.,  925.)  In  the  case  cited 
a  National  bank  advised  A  that  it  would  pay  all  checks  of  a  third  person, 
although  such  person  had  no  funds  on  deposit,  as  was  known  to  both  A 
and  the  bank.    In  reliance  on  such  promise,  A  cashed  checks  of  sucix 


19 

person,  and  transmitted  them  to  the  bank  for  payment.  The  bank 
issued  and  sent  to  A  its  drafts  on  a  correspondent  for  the  amount  of 
the  checks,  which  drafts  were  refused  payment.  Held,  That  the  contract 
v/as  one  purely  of  guaranty,  and  was  ultra  vires  on  the  part  of  the  bank, 
and  the  transaction  gave  A  no  right  of  action  against  it  on  the  drafts. 
So,  it  has  been  held  that  the  officers  and  directors  of  a  National  bank 
have  no  authority  to  bind  the  bank  by  a  guaranty  of  the  debts  of  a  third 
person  contracted  for  his  own  benefit.  (Commercial  National  Bank  v. 
Pirie,  27  C.  C.  A.,  171;  82  Fed.  Rep.,  799.)  So,  the  cashier  has  no  au- 
thority to  bind  the  bank  by  a  guaranty  of  a  mortgage  bond.  (Farmers' 
and  Merchants'  National  Bank  v.  Smith,  40  U.  S.  App.,  690.)  And  it  has 
been  held  that  a  National  bank  has  no  power,  either  with  or  without  a 
consideration,  to  agree  or  bind  itself  that  a  draft  drawn  upon  one  of  its 
customers  will  be  paid.  (First  National  Bank  of  Moscow  v.  American 
National  Bank,  173  Mo.,  153.) 

But  while  a  National  bank  may  not  lend  its  credit  for  the  accommoda- 
tion of  others,  still  it  may  guaranty  the  payment  of  commercial  paper 
as  incidental  to  the  exercise  of  its  power  to  buy  and  sell  the  same. 
(Thomas  v.  City  National  Bank  of  Hastings,  40  Neb.,  501.)  Thus, 
A  being  indebted  to  a  National  bank,  and  being  the  holder  of  certain 
negotiable  notes,  indorsed  them  generally,  and  delivered  them  to  the 
president  of  the  bank,  who  accepted  them  for  value  to  C,  at  the  same 
time  executing  in  the  name  of  the  bank  a  written  guaranty  of  payment. 
From  the  proceeds  of  the  sale,  A's  debt  to  the  bank  was  cancelled.  Held, 
That  the  guaranteeing  of  the  notes  under  such  circumstances  was 
within  the  powers  of  the  bank.    {Id.) 

Assuming  Obligations  of  Other  Bank. — A  National  bank  has  power 
to  make  a  contract  whereby,  in  consideration  of  the  transfer  to  it  of 
the  oflace  furniture,  lease  and  cash  assets  of  another  National  bank,  it 
will  assume  and  pay  the  liabilities  of  such  other  bank.  (Schofleld  v. 
State  National  Bank,  97  Fed.  Rep.,  282.) 


Loans  to  Officers. — A  National  bank  may  make  loans  to  its  officers 
and  directors  as  freely  as  to  other  persons.  (Blair  v.  First  National 
Bank  of  Mansfield,  10  Chicago  Legal  News,  84;  2  Nat.  Bank  Cas , 
173.)  But  the  loans  must  be  honest  and  the  borrowers  must  not  par- 
ticipate in  making  the  loans  to  themselves.     (Id.) 


Dealing  in  Checks. — Dealing  In  checks  is  a  part  of  the  usual  busi- 
ness of  banking,  and  would  be  within  the  general  powers  of  a  bank 
without  special  mention.    And  there  is  no  difference  in  this  respect  be- 
tween checks  payable  to  bearer  and  those  payable  to  order.     (First 
National  Bank  of  Rochester  v.  Harris,  108  Mass.,  514.) 


20 

Lending  fob  Customebs. — A  National  bank  is  not  authorized  to  en- 
gage in  the  business  of  lending  money  for  its  customers;  and  it  can  not 
be  held  liable  for  the  acts  of  its  officers  in  so  doing.  (Grow  v.  Cockrill, 
63  Ark.,  418.) 

Employment  of  Attobneys. — Under  th«  fourth  subdivision  of  section 
5136  a  National  bank  has  full  power  to  employ  attorneys  to  bring  or 
defend  suits  in  any  court  of  law  or  equity;  and  such  employment,  in- 
cluding the  agreement  for  compensation,  may  be  made  by  the  president 
of  such  bank.  Such  employment  by  the  president  is  a  sufficient  authoriz- 
ation and  employment,  and  the  bank  will  be  bound  thereby.  The 
power  to  complain  and  defend  is  not  limited  to  suits  in  which  the  bank 
may  be  successful;  nor  is  the  right  of  the  attorney  to  recover  limited 
by  the  character  of  the  questions  which  may  arise  in  the  case.  (Na- 
tional Bank  of  Guthrie  v.  Earl,  2  Okl.,  617;  see  also  Citizens'  National 
Bank  of  Kingman  v.  Berry,  53  Kans.,  696.) 

Beokee  in  Sale  of  Faem  Moetgages. — A  National  bank  has  no  power 
to  act  as  a  broker  in  selling  farm  mortgages  for  a  commission.  (Farm- 
ers' and  Merchants'  National  Bank  v.  Smith,  40  U.  S.  App.,  690.) 

Selling  to  Acquiee  Lien. — There  is  nothing  in  the  National  Banking 
Law  which  forbids  a  National  bank  selling  seed  grain  on  credit,  to 
acquire  the  lien  afforded  by  the  State  statute.  (First  National  Bank  of 
Parker  v.  Peavey  Elevator  Company,  10  S.  D.,  167.)  But  even  were 
such  a  transaction  forbidden,  only  the  Government  could  be  heard  to 
complain.     (Id.) 

Binding  Bank  to  Pay  Dbaft. — ^An  officer  of  a  National  bank  has  no 
power  to  bind  it  to  pay  the  draft  of  a  third  person  on  one  of  its  cus- 
tomers to  be  drawn  at  a  future  day,  when  it  expects  to  have  a  deposit 
from  him  sufficient  to  cover  it,  and  no  action  lies  against  the  bank  for 
its  refusal  to  pay  such  a  draft.  (Flannagan  v.  California  National 
Bank,  56  Fed.  Rep.,  959.) 

False  Repeesentation  of  Cashiee. — A  National  bank  may  be  held 
liable  for  damages  for  a  false  representation  made  by  its  cashier  as  to 
credit  of  a  customer  seeking  credit  at  another  bank.  (Nevada  Bank  of 
San  Francisco  v.  Portland  National  Bank,  59  Fed.  Rep.,  338.) 

Collection  by  Cashiee. — The  cashier  of  a  National  bank  has  au- 
thority on  behalf  of  the  bank  to  make  a  collection  from  a  Savings  bank. 
(Hanson  v.  Heard,  69  N.  H.,  190.)  The  fact  that  receipts  appear  upon 
their  face  to  be  the  personal  receipts  of  the  cashier  does  not  preclude  the 
depositor  from  showing  that  they  were  intended  and  understood  to  be 
receipts  in  his  capacity  as  cashier  of  the  bank.    (Id.) 


21 

Assigning  Judgment. — When  a  judgment  belonging  to  a  National 
bank  is  transferred  without  collecting  it,  the  presumption  is  that  the 
transfer  is  unauthorized.     (Cox  v.  Robinson,  70  Fed.  Rep.,  760.) 

Manufactuking  Business. — A  National  bank  has  no  power  to  engage 
in  a  manufacturing  business.  (Bletz  v.  Bank  of  Kentucky,  55  S.  W. 
Rep.,  697;  21  Ky.  L.  Rep.,  1554.) 

Partnership. — A  National  bank  has  no  power  to  become  a  member 
of  a  partnership,  and  cannot  be  held  liable  as  a  partner.  (Merchants' 
National  Bank  v.  Wehrmann,  69  Ohio  St.,  160.) 

Contract  to  Pay  for  the  Procuring  of  Customer. — In  the  case 
of  Dresser  v.  Traders'  National  Bank  (165  Mass.,  120),  it  was  held  by 
the  Supreme  Court  of  Massachusetts  that  a  National  bank  is  not  au- 
thorized to  make  a  contract  to  furnish  fire  insurance  to  a  person  in 
consideration  of  his  procuring  a  customer  for  the  bank;  and  it  was 
doubted  whether  the  bank  can  agree  to  pay  money  for  such  a  purpose. 
The  Court  said:  "Two  questions  are  then  presented:  First,  whether 
a  bank  can  agree  to  pay  money  to  a  third  person  for  the  purpose  of 
securing  a  customer;  and,  second,  if  it  can  do  so,  whether  it  can  agree 
to  furnish  to  such  third  person  for  such  a  purpose  fire  insurance  to 
a  specific  amount.  We  should  be  slow  in  answering  che  first  question 
in  the  affirmative.  Such  a  mode  of  doing  business  is  so  inconsistent 
with  sound  principles  of  banking  that  it  would  seem  that  the  directors 
would  not  be  justified  in  thus  spending  the  money  of  the  stockholders. 
But  it  is  unnecessary  to  decide  this  question,  as  we  are  of  opinion 
that  the  second  que::i.ion  must  be  answered  in  the  negative.  As  we 
understand  the  declaration,  the  oflBcers  of  the  bank,  acting  in  its  behalf, 
were  to  go  about,  either  personally  or  by  an  agent,  seeking  for  persons 
who  wished  to  insure  their  property,  and  when  they  had  found  them, 
put  the  matter  in  the  hands  of  the  plaintiff  who  would  cause  insurance 
to  be  made,  and  thus  earn  a  commission.  We  are  of  opinion  that  this 
would  be  so  far  outside  the  legitimate  purposes  for  which  National 
banks  are  organized  that  the  contract  declared  on  must  be  deemed  to  be 
ultra  vires  of  the  defendant  corporation." 

Donation  of  Funds.— Where  the  president  of  a  National  bank  signed 
its  name  to  a  subscription  paper  obligating  the  bank  to  donate  $200  to 
certain  parties  on  condition  that  they  would  erect  a  paper-mill  in  the 
city  of  K:—Held,  (1)  That  the  making  of  donations  of  its  funds  to 
aid  in  the  building  of  a  paper-mill  was  no  part  of  the  business  for 
which  the  bank  was  incorporated;  (2)  that  the  act  of  the  president  was 
not  within  the  scope  of  his  authority,  and  that  the  bank,  in  the  absence 
of  an  authorization  or  ratification  by  it  of  the  president's  act,  was  not 
bound  by  the  agreement  made.  (Robertson  v.  Buffalo  County  National 
Bank,  40  Neb.,  235.) 


2Z 

Clearing-house. — There  is  nothing  in  the  National  banking  law 
which  forbids  a  National  bank  to  become  a  member  of  a  clearing-house 
association  organized  merely  for  the  purpose  of  facilitating  settlements 
between  the  members  thereof.  (Philler  et  al.  v.  Patterson,  168  Pa.  St., 
468.) 

Officers — Tenure  of  Office. — The  officers  of  a  National  bank  must  be 
regarded  as  having  taken  and  accepted  their  positions  under  the  terms 
of  the  act,  and  to  hold  them  by  the  tenure  specified,  to  wit,  the  pleasure 
of  the  board  of  directors.  Harrington  v.  First  National  Bank  of  Chitten- 
ango,  1  Thompson  &  Cook  (N.  Y.),  361.)  it  was  intimated  in  the  case 
cited  that  the  officers  could  not  be  hired  for  a  specified  time;  and  it 
has  since  been  held  that  the  cashier  of  a  National  bank  can  not  be 
chosen  for  any  stated  term,  but  holds  his  office  at  the  pleasure  of  the 
board  of  directors.  (Westervelt  v.  Mohrenstecher,  40  U.  S.  App.,  221.) 
And  a  by-law  which  provides  that  he  shall  hold  his  office  for  a  stated 
term,  as,  for  instance,  for  one  year,  is  void.     {Id.) 

Bonds  of  Officers. — The  directors  are  vested  with  a  sound  discretion 
as  to  whether  or  not  bonds  shall  be  given  by  the  officers  of  the  bank. 
(Robinson  v.  Hill,  63  Fed.  Rep.,  522.)  But  special  circumstances  may 
exist  which  will  require  them  to  do  so.  (Id.)  It  is  not  necessary  that 
the  acceptance  of  the  bond  should  be  signified  by  memoranda  entered 
upon  the  joilrnal  or  minutes  of  the  directors.  The  acceptance  is  to  be 
presumed  from  the  retention  of  the  bond,  and  from  the  fact  that  the 
officer  is  permitted  to  enter  upon  or  continue  in  the  discharge  of  his 
duties.    (Graves  v.  The  Lebanon  National  Bank,  10  Bush.,  23.) 

A  surety  on  the  bond  of  a  cashier  of  a  National  bank  Is  not  discharged 
by  the  fact  that  before  the  bond  was  given,  the  cashier  had  committed 
frauds  upon  the  bank,  if  such  frauds  were  unknown  to  the  officers  of  the 
bank,  although  they  were  guilty  of  gross  negligence  in  not  discovering 
them.    (Tapley  v.  Martin,  116  Mass.,  275.) 

Ultra  Vires. — Where  a  National  bank  makes  a  contract  which  is 
beyond  its  powers,  such  contract  is  void,  and  not  merely  voidable,  and  it 
cannot  be  estopped  from  making  the  defense  of  ultra  vires  when  it  is 
sued  for  non-performance  on  its  part.  (Metropolitan  Stock  EJxchange  v. 
Lyndonville  National  Bank  (Vt.),  57  Atl.  Rep.,  101.)  But  there  are 
many  cases  where  such  a  contract,  having  been  performed,  has  been 
enforced.  Thus,  where  bonds  were  sold  to  a  National  bank  under  a 
contract  by  which  it  agreed  to  replace  the  bonds  to  a  seller  at  the  same 
price,  or  less,  it  was  held  that,  admitting  the  contract  to  be  one  the  bank 
could  not  legally  make,  yet  it  could  not  hold  the  bonds  under  or  by 
virtue  of  the  contract,  and  at  the  same  time  refuse  to  comply  with  the 
terms  of  purchase.  (Logan  County  Bank  v.  Townsend,  139  U.  S.,  67.) 
So,  even  if  a  National  bank  has  not  authority  to  purchase  commercial 


paper,  this  can  not  be  set  up  as  a  defense  by  the  person  liable  on  the 
paper  when  sued  by  the  bank  thereon.  (Prescott  National  Bank  v. 
Butler,  157  Mass.,  548.)  So,  where  a  National  bank  has  made  a  loan 
upon  a  real  estate  mortgage,  its  want  of  power  to  take  such  a  security 
is  not  a  defense  to  the  mortgagee  in  a  suit  by  the  bank  to  foreclose  the 
mortgage.  (National  Bank  v.  Matthews,  98  U.  S.,  621.)  So,  in  an 
action  to  determine  an  adverse  claim  to  real  estate,  which  had  been  sold 
under  a  judgment,  and  bid  in  by  the  judgment  creditor,  and  the  certi- 
ficate of  sale  assigned  to  a  National  bank,  it  was  held  that  the  de- 
fendants could  not  raise  the  question  that  the  bank  had  no  authority  to 
purchase  the  certificate.  (Hennessey  v.  City  of  St.  Paul,  54  Minn.,  219.) 
And  so,  in  an  action  by  a  National  bank  on  railroad  aid  bonds,  the 
obligor  cannot  set  up  as  a  defense  that  the  purchase  of  the  bonds  by  the 
bank  was  ultra  vires,  (Town  Council  of  Lexington  v.  Union  National 
Bank,  75  Miss.,  1.)  And  where  a  borrower  has  deposited  collateral  se- 
curities with  a  National  bank,  he  cannot  set  up  as  a  defense  that  the 
bank  had  no  power  to  take  the  same.  (Reynolds  v.  Touzalin  Imp.  Co., 
62  Neb.,  236.) 

Conversely,  where  a  National  bank  has  received  and  retained  the 
benefit  of  a  contract  made  by  its  officers,  it  can  not  plead  that  the  con- 
tract was  unauthorized  by  the  directors,  or  beyond  the  power  of  the 
bank  or  its  officers  to  make.  (Tootle  v.  First  National  Bank  of  Port 
Angeles,  6  Wash.,  181.)  Thus,  it  can  not  interpose  the  defense  of  ultra 
vires  to  a  contract  made  by  it  to  secure  the  free  entrance  of  light  and 
air  into  its  banking  house,  where  it  has  enjoyed  the  benefits  of  the  con- 
tract. (Trustees  of  First  Presbyterian  Church  v.  National  State  Bank, 
57  N.  J.  Law,  27.)  And  an  agreement  to  indemnify  a  surety  upon  an 
attachment  bond  is  enforcible  against  a  National  bank,  where  the 
surety  has  paid  the  bond,  though  the  bond  was  not  given  for  the  benefit 
of  the  bank.  (Seeber  v.  Commercial  National  Bank  of  Ogden,  77  Fed. 
Rep.,  957.) 

The  fact  that  the  act  of  a  National  bank  in  assuming  to  represent 
another  as  agent  is  ultra  vires  will  not  exempt  it  from  the  rules  of  law 
which  regulate  the  duties  of  an  agent  to  his  principal.  It  cannot  plead 
its  own  violation  of  law  to  justify  a  breach  of  trust.  Accordingly,  when 
a  National  bank  which  had  assumed  to  sell  for  another  certain  notes 
owned  by  him,  but  had,  instead  of  so  selling  them  to  a  third  person, 
without  his  knowledge,  sold  them  to  itself,  it  was  held  that  the  bank 
had  violated  its  duty  to  the  owner,  the  same  as  if  it  had  full  power 
under  the  law  to  act  as  such  agent;  and  was  therefore  guilty  of  a  con- 
version of  such  notes.  (Anderson  v.  First  National  Bank  of  Grand 
Forks,  5  N.  D.,  451.) 

Where  a  National  bank  has  itself  purchased  notes  which  the  owner 

had  authorized  it  to  sell  to  a  third  party,  it  is  liable  for  their  value  as 

for  a  conversion,  even  though  it  had  not  the  power  to  act  as  the  owner's 

agent  for  the  sale  thereof.     (First  National  Bank  of  Grand  Forks  v, 
4 


24 

Anderson,  172  U.  S.,  573.)  So,  where  it  uses  in  its  business  money 
obtained  by  one  of  its  officers  as  a  loan  to  it,  it  cannot  escape  liability 
claiming  the  loan  was  not  negotiated  by  it,  or  by  its  directors,  or  that  it 
could  not  itself  have  legally  borrowed  the  money.  (Aldrich  v.  Chemical 
National  Bank,  176  U.  S.,  618.)  A  National  bank  took  as  security  for  a 
debt,  partly  pre-existent  and  partly  created  at  the  time,  a  real  estate 
mortgage,  naming  an  individual,  an  officer  of  the  bank,  as  mortgagee. 
The  transaction  was  usurious.  Held,  That,  having  given  the  transac- 
tion the  form  of  one  with  an  individual,  for  the  purpose  of  evading  the 
liabilities  peculiar  to  National  banks,  the  bank  could  not  be  heard  to 
assert  its  true  nature  to  evade  the  liabilities  attached  to  individuals, 
and  to  claim  the  privileges  of  National  banks.  (Gadsen  v.  Thrush,  56 
Neb.,  565.)  But  where  a  National  bank  has  purchased  stock  in  another 
corporation,  out  of  the  ordinary  course  of  its  business,  and  not  as  se- 
curity for  a  debt  previously  contracted,  it  may  plead  ultra  vires,  in  an 
action  against  it  as  a  stockholder  of  such  corporation.  (The  California 
National  Bank  v.  Kennedy,  167  U.  S.,  362,  overruling  Kennedy  v.  Cali- 
fornia Savings  Bank,  101  Cal.,  495.) 

Bank  as  Trustee. — Acting  as  trustee  and  holding  the  securities  upon 
which  an  issue  of  bonds  is  based  is  not  considered  as  necessarily  "  in- 
cidental "  to  the  powers  conferred  on  a  National  bank,  but  more  in  the 
nature  of  the  business  of  a  trust  company,  and  therefore  not  a  proper 
undertaking  for  a  National  bank. 

§  17.  Limitations  as  to  Eeal  Estate  and  Mortgages. — A  Na- 
tional banking  association  may  purchase,  hold,  and  convey  real 
estate  for  the  following  purposes,  and  for  no  others: 

First.  Such  as  shall  be  necessary  for  its  immediate  accommo- 
dation in  the  transaction  of  its  business. 

Second.  Such  as  shall  be  mortgaged  to  it  in  good  faith  by  way 
of  security  for  debts  previously  contracted. 

Third.  Such  as  shall  be  conveyed  to  it  in  satisfaction  of  debts 
previously  contracted  in  the  course  of  its  dealings. 

Fourth.  Such  as  it  shall  purchase  at  sales  under  judgments,  de- 
crees, or  mortgages  held  by  the  association,  or  shall  purchase  to 
secure  debts  due  to  it. 

But  no  such  association  shall  hold  the  possession  of  an^y  real 
estate  under  mortgage,  or  the  title  and  possession  of  any  real 
estate  purchased  to  secure  any  debts  due  to  it,  for  a  longer  period 
than  ^ve  years.    (Kev.  Stat.  U.  S.  Sec.  5137.) 

How  Purchases  and  Conveyances  Made. — In  purchasing  or  conveying 
real  estate  a  National  bank  should  act  through  its  president  or  cashier, 
duly  authorized  by  regular  resolution  of  its  board  of  directors. 


25 

Bankinq-House — Chabacteb  of  Improvement — Lease. — If  the  land 
which  a  National  bank  purchases  or  leases  for  the  accommodation  of  its 
business  is  very  valuable,  it  may  exercise  the  same  rights  that  belong  to 
other  landowners  of  improving  it  in  a  way  that  will  yield  the  largest 
income,  lessen  its  own  rent,  and  render  that  part  of  its  funds  which 
are  invested  in  realty  most  productive.  (Brown  v.  Schleier,  118  Fed. 
Rep.,  981.)  Where  a  National  bank  invests  in  real  estate  in  excess  of  its 
powers,  and  the  transaction  has  been  acquiesced  in  for  a  long  time, 
only  the  Government  can  be  heard  to  complain,  and  a  receiver  appointed 
by  the  Comptroller  of  the  Currency  cannot  do  so.  (Id.)  Investment  in 
a  banking-house  property  should  not  be  out  of  proportion  to  the  capital 
and  business  of  the  bank. 

A  National  bank  may  lease  property  for  a  term  of  years  and 
agree  with  the  lessor  to  construct  such  a  building  as  it  desires,  provided 
that  it  acts  in  good  faith,  solely  with  a  view  of  obtaining  an  eligible 
location,  and  not  with  a  view  of  investing  its  funds  in  real  property  or 
embarking  them  in  speculations  in  real  estate.  (Brown  v.  Schleier,  et 
ah,  118  Fed.  Rep.,  981.)  Such  a  lease  is  not  invalid  because  made  for  a 
longer  period  than  the  corporate  existence  of  the  bank.  (Id.)  And, 
even  though  the  lease  be  assignable  only  with  the  consent  of  the  lessor. 
(Weeks  th  International  Trust  Company,  125  Fed.  Rep.,  371.)  Nor  is 
such  a  lease  invalid  because  the  gross  rents  payable  during  the  term 
will  reach  a  sum  exceeding  the  amount  of  the  bank's  capital  stock. 
(Brown  v.  Schleier,  et  al.,  118  Fed.  Rep.,  981.)  But  a  National  bank 
which  has  not  been  authorized  by  the  certificate  of  the  Comptroller  of 
the  Currency  to  commence  the  business  of  banking  has  no  power  to 
execute  a  lease  of  a  banking-house  for  a  term  of  years.  (McCormick  v. 
Market  National  Bank  of  Chicago,  165  U.  S.,  538;  S.  C,  162  111.,  100.) 
Nevertheless,  persons  organizing  a  National  bank  may  secure  an  option 
on  property  desired  for  a  banking-house  with  a  provisional  agreement 
for  a  lease  to  be  executed  when  the  bank  is  chartered. 

When  Real  Estate  Security  May  Be  Taken. — The  authority  con- 
ferred by  the  second,  third  and  fourth  subdivisions  of  this  section  is 
necessary  to  enable  the  bank  to  collect  the  debts  due  to  it,  and  is  such 
authority  as  is  conferred  in  nearly  all  grants  of  corporate  power.  But, 
in  order  that  the  bank  may  acquire  any  interest  in  real  estate,  or  any 
mortgage  or  lien  thereon,  under  these  subdivisions,  it  is  essential  that 
there  should  have  been  a  debt  previously  contracted  in  good  faith. 
There  is  no  authority  granted  to  deal  in  real  estate,  or  to  take  real 
estate  or  any  mortgage  or  lien  thereon,  as  security  for  contemporaneous 
loans.  Thus,  if  a  bank  has  discounted  a  note  upon  the  faith  of  the 
paper  itself,  and  the  paper  is  not  paid  at  maturity,  or  if  before  it 
matures,  the  maker,  or  the  person  who  negotiated  it,  becomes  embar- 
rassed, then  the  bank,  acting  bona  fide,  would  have  the  right  to  take  a 


26 

mortgage  or  conveyance  of  real  estate  as  security  for,  or  in  satisfaction 
of,  the  debt;  but  it  would  have  no  right  to  take  a  mortgage  to  secure  a 
note  discounted  at  the  same  time,  or  to  secure  paper  to  be  discounted 
thereafter,  or  to  enter  into  an  agreement  at  the  time  of  making  the 
discount  that  it  will  take  a  conveyance  of  real  estate  in  payment  or 
satisfaction  of  the  note.  These  principles  are  now  settled  beyond  con- 
troversy. (Bank  v.  Matthews,  98  U.  S.,  621;  Fowler  v.  Scully,  72  Pa. 
St.,  451;  Crocker  v.  Whitney,  71  N.  Y.,  161;  Fridley  v.  Bowen,  87  Ill.» 
151.)  ♦ 

As  Secubity  fob  Debts  Pbeviously  Conteacted. — The  National  banks 
may  take  mortgages  on  real  estate  to  secure  the  payment  of  debts 
previously  contracted.  (First  N.  B.  of  Skowhegan  v.  Maxfield,  83  Me., 
576.)  And  the  power  of  the  National  banks  to  secure  or  satisfy  their 
debts  out  of  real  estate  is  ample  for  the  purpose;  and,  in  the  tona  fide 
exercise  of  their  power  in  this  respect,  they  may  do  whatever  an  in- 
dividual would  do  under  similar  circumstances.  If  the  real  object  of 
the  purchase  is  to  secure  or  satisfy  debts,  the  authority  of  the  bank 
to  purchase  is  not  limited  to  the  exact  amount  of  the  debts,  but  it  is 
entitled  to  purchase  such  real  estate  as  may  be  necessary  for  the  pur- 
pose. (Upton  17.  National  Bank  of  South  Reading,  120  Mass.,  153.)  Ac- 
cordingly, it  has  been  held  that,  when  the  inducement  to  the  transaction 
is  the  security  of  an  antecedent  indebtedness,  the  bank  may  make  an  ad- 
ditional advance,  and  take  a  mortgage  on  real  property  to  secure  both 
the  advance  and  the  prior  indebtedness.  {Id.)  So  it  may  take  a  convey- 
ance of  real  estate  worth  more  than  the  debt,  and  pay  the  difference  be- 
tween the  debt  and  the  value  of  the  property.  (Libby  v.  Union  National 
Bank,  99  111.,  622.)  And  similarly,  when  there  is  a  prior  lien  upon  the 
property,  the  bank  may  discharge  this  lien  and  take  a  mortgage  to  cover 
the  whole  amount.  (Ornn  v.  Merchants'  National  Bank,  16  Kans.,  34), 
or  it  may  purchase  the  prior  lien  and  enforce  it  in  its  own  behalf. 
(Holmes  v.  Boyd,  90  Ind.,  322.)  So,  it  may  be  substituted  to  the  rights 
of  a  surety  who  has  taken  a  mortgage.  (Magoflln  v.  Boyle  National 
Bank  of  Danville  (Ky.),  695  W.  Rep.,  702;  24  Ky.  L.  Rep.,  785.) 
And,  in  taking  a  mortgage  to  secure  the  debt  upon  notes  already  due, 
it  is  not  a  violation  of  the  law  for  the  bank  to  agree  to  renew  the  notes 
and  hold  the  mortgage  as  security  for  the  renewals.  (Howard  National 
Bank  v.  Loomis,  51  Vt.,  349.)  Where  a  bank  sells  real  estate  of  which 
it  is  the  owner,  it  may  take  a  mortgage  on  the  same  to  secure  payment 
therefor.     (New  Orleans  National  Bank  v.  Raymond,  29  La.  Ann.,  355.) 

Debentuees — Stock  of  Real  Estate  Companies — ^Wife's  Separate 
Estate. — Very  difficult  questions  frequently  arise  as  to  whether  a  con- 
templated transaction  is  within  the  inhibition  against  loans  on  real 
estate.  One  question  of  frequent  occurrence,  especially  in  the  West,  is 
whether  the  debentures  of  mortgage  loan  companies  can  be  taken  as 


27 

collateral.  This  point  has  never  been  judicially  determined,  but  the 
Comptrollers  of  the  Currency  have  generally  expressed  the  opinion  that 
they  are  not  proper  securities  for  a  National  bank  to  receive.  But  it 
has  been  held  by  the  Supreme  Court  of  Minnesota  that  a  National 
bank  may  make  loans  upon  the  security  of  the  stock  of  a  corporation 
whose  property  consists  solely  of  real  estate.  (Baldwin  v.  State  Na- 
tional Bank,  26  Minn.,  43.)  Where  a  married  woman  indorsed  a  note: 
"  I  hereby  charge  my  separate  and  personal  estate  for  the  payment  of 
the  within  note"  it  was  held  by  the  Court  of  Appeals  of  New  York 
(Third  National  Bank  v.  Blake,  73  N.  Y.,  260)  that  the  indorsement 
was  to  be  treated  as  personal  security,  within  the  meaning  of  the  Na- 
tional banking  law,  and  not  as  a  mortgage. 

Mortgage  Given  to  Indobser  to  Enure  to  Bank. — It  has  been  held 
that  a  National  bank  may  make  an  agreement  that,  in  case  a  note  dis- 
counted by  it  shall  not  be  paid,  a  mortgage  given  by  the  maker  to  his 
indorser  shall  enure  to  the  benefit  of  the  bank  (First  National  Bank  v. 
Haire,  36  Iowa,  443) ;  but  this  decision  seems  to  be  very  questionable. 

Promissory  Notes  Secured  by  Mortgage — Judgment  Notes. — The 
Solicitor  of  the  Treasury,  in  an  opinion  given  to  the  Comptroller  of 
the  Currency.,  has  held  that  it  is  not  unlawful  for  a  National  bank  to 
lend  upon  a  promissory  note,  which  is  secured  by  bonds  and  notes 
which  are  in  turn  secured  by  real  estate,  nor  to  lend  on  judgment  notes, 
which  when  recorded  become  liens  on  real  estate;  provided  such  loans 
are  made  solely  on  personal  security  given.  The  Comptroller's  office 
formerly  accepted  this  opinion,  but  now  holds  that  such  loans  are  not 
lawful.    There  has  been  no  judicial  decision  on  the  subject. 

Violation  of  Law  Can  Not  Be  Set  Up  by  Borrower. — But  while  a 
National  bank  is  forbidden  to  make  loans  upon  real  estate  security, 
this  point  can  not  be  raised  against  the  bank  when  it  seeks  to  foreclose 
a  mortgage  or  otherwise  satisfy  the  debt  out  of  the  property.  No  one 
but  the  Government  can  be  heard  to  complain  that  the  bank  has  ex- 
ceeded its  powers,  and  the  only  penalty  which  it  incurs  is  a  liability  to 
a  forfeiture  of  its  franchises.  (National  Bank  v.  Matthews,  98  U.  S., 
621;  First  National  Bank  of  St.  Thomas,  Fleth,  10  N.  D.,  281.)  And 
where  the  bank  acquires  real  estate,  which  it  had  no  authority  to  take, 
the  conveyance  to  it  is  not  void,  but  only  voidable,  at  the  option  of  the 
Government;  and  its  title  to  such  property  is  good  until  assailed  in  a 
direct  proceeding  brought  by  the  Government.  (Reynolds  v.  Crawfords- 
ville  Bank,  112  U.  S.,  405.) 

Policy  of  the  Law. — The  prohibition  against  loans  on  real  estate  Is 
a  feature  of  the  law  which  has  been  much  criticized  in  some  quarters; 
and  as  evidence  that  this  restriction  upon  the  powers  of  the  National 


I 


28 

banks  is  unreasonable  and  unnecessary,  it  is  urged  that  real  estate  is 
the  best  kind  of  security;  that  savings  banks,  trust  companies,  and 
insurance  companies  are  authorized  to  make  such  loans;  and  why, 
therefore,  should  not  the  National  banks  be  permitted  to  do  the  same? 
But,  by  the  great  majority  of  bankers,  the  restriction  is  deemed  wise 
and  salutary.  The  objection  to  real  estate  security  is  not  to  its  suf- 
fiGiency,  but  to  the  kind.  As  the  obligations  of  the  banks  are  largely 
payable  on  demand,  it  is  necessary  that  the  securities  it  holds  should 
be  readily  convertible  into  money;  and  while  a  mortgage  upon  real 
estate  may  be  good  security,  it  can  not  be  made  immediately  available. 
In  case  of  an  emergency.  Personal  securities  of  the  kind  usually  taken 
by  banks  can  be  quickly  assigned,  and  promptly  realized  upon; 
but  the  transfer  of  any  interest  in  real  estate  is  always  attended  with 
more  or  less  delay.  It  has  not  infrequently  been  the  case  that  banks 
have  been  compelled  to  suspend  when  their  assets  were  more  than  suf- 
ficient to  pay  their  debts,  simply  because  a  large  portion  of  the  assets 
were  real  estate  securities,  upon  which  it  was  impossible  to  realize 
at  the  proper  time.  In  the  case  of  insurance  companies,  trust  com- 
panies, savings  banks,  and  similar  corporations  there  is  not  the  same 
necessity  for  having  the  assets  in  a  convertible  form,  but  it  is  rather 
desirable  that  a  large  portion  of  the  investments  shall  be  of  a  more  or 
less  permanent  character;  and,  therefore,  real  estate  loans  are  well 
adapted  to  their  purpose. 

§  18.  Amount  of  Capital  Required. — No  association  shall  be  or- 
ganized with  a  less  capital  than  one  hundred  thousand  dollars, 
except  that  banks  with  a  capital  of  not  less  than  fifty  thousand 
dollars  may,  with  the  approval  of  the  Secretary  of  the  Treasury, 
be  organized  in  any  place  the  population  of  which  does  not  exceed 
six  thousand  inhabitants,  and  except  that  banks  with  a  capital  of 
not  less  than  twenty-five  thousand  dollars  may,  with  the  sanction 
of  the  Secretary  of  the  Treasury,  be  organized  in  any  place  the 
population  of  which  does  not  exceed  three  thousand  inhabitants. 
No  association  shall  be  organized  in  a  city  the  population  of 
which  exceeds  fifty  thousand  persons  with  a  capital  of  liess  than 
two  hundred  thousand  dollars.  (Kev.  Stat.  U.  S.  Sec.  5138,  as 
amended  by  Act  March  14,  1900,  Ch.  41,  Sec.  10.) 

Detekmination  of  Population. — ^The  Comptroller  relies  for  informa- 
tion as  to  population  generally  on  the  Census  Bureau,  which,  through 
its  agents  in  different  sections,  is  usually  able  to  give  the  required  data, 
but  the  Comptroller's  findings  in  regard  to  this  are  not  necessarily  final, 
and,  in  case  the  applicants  to  organize  a  National  bank  believe  the 


29 

population  reported  to  the  Comptroller  not  correct,  they  may  furnish 
such  counter  evidence  as  they  may  be  able  to  obtain.  A  certificate 
from  the  mayor  of  the  place  or  other  good  evidence  of  actual  population 
probably  will  satisfy  the  Comptroller.  Any  error  of  his  as  to  population 
can  be  corrected  in  appropriate  legal  proceedings.  It  sometimes  hap- 
pens that  banks  have  less  than  the  minimum  capital  required  by  law  for 
the  population  of  the  place.  The  explanation  is  that  they  were  either 
organized  when  the  places  were  smaller,  or  were  organized  in  villages 
afterward  absorbed  by  cities  lying  near. 

Authorization  of  Banks  Under  $100,000  Capital. — When  application 
is  made  to  the  Comptroller  for  a  bank  with  less  than  $100,000  capital, 
he  certifies  the  application,  with  statement  as  to  population,  etc.,  to  the 
Secretary  of  the  Treasury,  who  thereupon  takes  action  and  approves  or 
not  as  he  deems  best.  If  parties  applying  are  well  endorsed  as  responsi- 
ble and  acting  in  good  faith,  approval  will  be  given  regardless  of 
whether  there  appear  to  be  need  of  additional  banking  facilities  in  the 
place  or  not. 


§  19.  Par  Value  of  Stock — Transfers — Stockholders*  Rights 
and  Liabilities. — The  capital  stock  of  each  association  shall  be 
divided  into  shares  of  one  hundred  dollars  each,  and  be  deemed 
personal  property,  and  transferable  on  the  books  of  the  asso- 
ciation in  such  manner  as  mav  be  prescribed  in  the  by-laws  or 
articles  of  association.  Every  person  becoming  a  shareholder  by 
such  transfer  shall,  in  proportion  to  his  shares,  succeed  to  all  the 
rights  and  liabilities  of  the  prior  holder  of  such  shares;  and  no 
change  shall  be  made  in  the  articles  of  association  by  which  the 
rights,  remedies  or  security  of  the  existing  creditors  of  the  asso- 
ciation shall  be  impaired.    (Eev.  Stat.  XJ.  S.  Sec.  5139.) 

In  What  Cases  Par  Value  Less  Than  One  Hundbed  Dollars. — 
The  exception  to  the  division  into  shares  of  $100  each  is  in  case  of 
State  banks  converted.  (See  section  38.)  If  a  converted  bank  desires 
to  change  the  denomination  of  its  shares,  the  new  denomination  must 
be  $100. 

State  Statutes. — It  is  not  competent  for  State  legislation  to  limit  or 
interfere  with  the  transferable  quality  of  National  bank  stock,  as  the 
same  is  left  by  the  statutes  of  the  United  States.  (Doty  v.  First  Na- 
tional Bank  of  Larimore,  3  N.  D.,  9.)  But  it  has  been  held  that  a 
State  statute  prescribing  the  mode  of  transfer  of  stock  by  executors  and 
administrators  will  apply  to  the  stock  of  a  National  bank  located  in 
such  State.     (Hobbs  v,  Westerp  Nation^il  ^ank  (U.  S.  Ct.  Ct),  2  Nat 


30 

Bk.  Cas.,  187.)  And  it  is  held  that  a  State  statute  which  provides  that 
the  stockholders  of  all  private  corporations  shall  have  the  right  of 
access  to  and  inspection  and  examination  of  the  books,  records  and 
papers  of  the  corporation  at  all  reasonable  and  proper  times,  applies  to 
National  banks  located  within  the  State.  (Winter  v.  Baldwin,  89  Ala., 
483.)  And  National  bank  stock  is  subject  to  seizure  and  sale  on  execu- 
tion under  authority  of  State  laws.  (In  re  Braden's  Estate,  165  Pa.  St., 
184.) 

Transfee  of  Stock — Entry  of  Transfer — Lost  Certificates. — ^The 
transfer  of  stock  in  National  banks  is  not  governed  by  different  rules 
from  those  which  are  ordinarily  applied  to  the  transfer  of  stock  in 
other  corporations.  (Johnson  v.  Laflin,  103  U.  S.,  800.)  The  entry  of 
the  transaction  in  the  books  of  the  bank  is  required,  not  for  the  purpose 
of  passing  the  title  from  seller  to  buyer,  but  for  the  protection  of  the 
parties,  and  others  dealing  with  the  bank,  and  to  enable  the  bank  to 
know  who  are  its  stockholders.  (Id.)  Accordingly,  it  has  been  held  by 
the  Supreme  Court  of  the  United  States  that  where  the  shareholder 
delivers  his  certificates  of  stock  to  the  purchaser,  with  a  blank  power  of 
attorney  to  make  the  transfer  on  the  books  of  the  bank,  and  receives 
the  purchase-money,  the  sale  is  complete  and  the  title  passes  from 
seller  to  buyer.  (Id.)  And  so  it  has  been  decided  that  where  a  share- 
holder who  has  sold  his  stock  delivers  the  certificates  with  a  proper 
power  of  attorney  to  the  cashier  with  a  request  that  the  transfer  be 
made  upon  the  books,  and  the  cashier  promises  so  to  do.  the  transferror 
has  done  all  that  is  legally  required  of  him  to  divest  himself  of  the 
liability  of  a  stockholder,  and  should  the  cashier  fail  to  make  the  trans- 
fer on  the  books,  the  transferror  can  not  be  held  as  a  stockholder  in  case 
the  bank  should  afterwards  become  insolvent.  (Hayes  v.  Shoemaker, 
39  Fed.  Rep.,  319;  Young  v.  McKay,  50  Fed.  Rep.,  397.)  And  it  is 
further  held  that  it  is  wholly  unimportant  in  such  case  whether  the 
notice  of  sale  and  request  to  transfer  are  in  writing  or  oral.  (Hayes  v. 
Shoemaker,  39  Fed.  Rep.,  319.)  When  a  certificate  of  stock  is  left  with 
the  officers  of  the  bank  to  be  transferred  on  the  books,  the  transfer  takes 
place  at  the  time  when  it  is  so  left,  and  not  at  the  time  of  actual  entry 
in  the  books,  provided  the  party  leaving  it  has  authenticated  to  the 
officers  of  the  bank  his  intention  to  make  such  transfer  in  the  manner 
prescribed  by  the  by-laws  of  the  bank.  (Young  v.  McKay,  50  Fed.  Rep., 
394.)  The  rights  of  a  transferee  of  National  bank  stock,  under  an  un- 
recorded transfer,  good  at  common  law,  are  superior  to  the  rights  of 
a  subsequent  attaching  creditor  of  the  transferror  without  notice. 
(Doty  V.  First  National  Bank  of  Larimore,  3  N.  D.,  9.) 

But  while  the  noting  of  the  transfer  on  the  books  is  not  necessary 
for  the  purpose  of  passing  the  title  to  the  stock,  it  is  essential  for  other 
purposes.  It  is  important  to  the  transferee  that  the  transfer  should  be 
properly  registered,  for,  until  this  is  done,  the  corporation  is  not  bound 


31 

to  recognize  him  as  a  stockholder,  and  he  is  not  entitled  to  vote  upon 
the  stock,  or  to  receive  the  dividends  thereon,  or,  in  fact,  to  have  any 
of  the  privileges  of  a  stockholder;  and  the  transferror  has  an  interest 
in  having  the  transfer  registered,  because  he  will  not  be  discharged 
from  his  liability  as  a  stockholder  until  this  is  done.  (Bowdell  v.  Farm- 
ers' and  Merchants'  National  Bank,  Brown's  National  Bank  Cases,  147.) 

The  record  made  of  the  transfer  upon  the  books  of  the  bank  is  suf- 
ficient, as  between  the  transferee  and  the  bank,  to  work  a  change  of 
ownership,  and  new  certificates  are  not  necessary  to  his  becoming  the 
ower  of  the  stock  so  transferred.  (Keyser  v.  Hitz,  133  U.  S.,  438.) 
Subscription  to  stock  and  payment  in  full  and  entry  of  his  name  on 
the  books  as  a  stockholder  makes  the  subscriber  a  shareholder  without 
taking  out  a  certificate.  (Pacific  National  Bank  v.  Eaton^  141  U.  S., 
227;  Thayer  v.  Butler,  141  U.  S.,  234;  Butler  v.  Eaton,  141  U.  S.,  240.) 

In  case  of  loss  of  a  certificate  of  stock  a  bond  of  indemnity  should  be 
required  before  the  issue  of  a  duplicate  certificate  to  avoid  the  possi- 
bility of  the  bank  becoming  liable  for  an  illegal  issue. 

Right  of  Stockholders  to  Transfer. — ^A  shareholder  in  a  National 
bank,  while  it  is  a  going  concern,  has  the  absolute  right,  in  the  ab- 
sence of  fraud  to  make  a  hona  fide  and  actual  sale  and  transfer  of  his 
shares  at  any  time,  to  any  person  capable  in  law  of  purchasing  and  hold- 
ing the  same,  and  of  assuming  the  transferror's  liabilities  in  respect 
thereto,  and  this  right  is  not  subject,  in  such  cases,  to  the  control  of 
the  directors  or  other  stockholders.  (Johnson  v.  Laflin,  5  Dill,  65.) 
The  directors  are  authorized  to  prescribe  regulations  under  which  the 
transfer  of  stock  shall  be  made;  but  these  regulations  must  be  reason- 
able, and  under  the  pretence  of  prescribing  the  manner  thereof,  the 
directors  can  not  clog  the  transfer  with  useless  restrictions.  (Johnson 
V.  Lafiin,  103  U.  S.,  800.)  The  transfer  does  not  require  to  be  approved 
by  the  directors,  nor  can  they  decline  to  make  it  in  a  proper  case.  (5  Dill., 
65.)  But  where  the  transfer  is  sought  to  be  made  to  a  person  incapable 
in  law  of  assuming  the  liabilities  of  a  stockholder — as  where  it  is  made 
to  an  infant,  or  to  a  person  of  unsound  mind — then  the  directors  might 
refuse  to  permit  the  transfer  to  be  registered,  for  such  a  transfer  is  a 
fraud  upon  the  corporation,  the  stockholders  and  creditors.  And  so 
they  might  refuse  where  the  transfer  is  evidently  made  merely  for  the 
purpose  of  escaping  liability,  as  where  a  shareholder  in  an  insolvent 
bank  seeks  to  transfer  his  stock  to  a  pauper,  or  man  of  straw,  or  to 
an  insolvent  or  irresponsible  person.  Where  the  person  intrusted  by 
the  directors  with  the  duty  of  entering  the  transfers  on  the  books  of  the 
bank,  refuses  for  insufficient  reason  to  note  a  transfer,  the  bank  will 
be  liable  for  the  damages  resulting  therefrom.  (Case  v.  Citizens'  Bank, 
100  U.  S.,  446.) 

On  December  30,  1875,  A  sold  certain  shares  of  bank  stock  to  B, 
and  assigned  them  by  a  transfer  written  on  the  back  of  the  certificate. 


32 

By  the  by-laws  of  the  bank,  stock  was  transferable  only  on  the  books  of 
the  company.  On  December  14,  1878,  the  shares  were  attached  by  a 
judgment  creditor  of  A  and  sold  and  transferred  to  C.  Neither  the  bank 
nor  the  creditor  had  knowledge  of  the  transfer  to  B.  In  January,  1880, 
B  presented  his  certificate  and  transfer  to  the  officers  of  the  bank  and 
demanded  a  transfer  of  the  stock,  which  was  refused,  whereupon  he 
brought  suit  against  the  bank  for  such  refusal:  Held,  That  the  bank 
was  liable  in  damages  for  the  refusal  to  transfer  the  shares.  (Hazard  v. 
National  Exchange  Bank  of  Newport,  26  Fed.  Rep.,  94.) 

Specific  Performance. — ^A  court  of  equity  will  not  enforce  specific 
performance  of  an  agreement  to  sell  shares  in  a  National  bank  to  enable 
the  purchaser  to  obtain  control  of  the  bank,  for  the  reason  that,  (1) 
equity  will  not  generally  enforce  specific  execution  of  a  contract  relat- 
ing to  personal  chattels,  and  (2)  because  a  decree  enforcing  the  agree- 
ment in  question  would  be  against  public  policy.  (Foil's  Appeal,  21 
Alb.,  L.  J.;  2  N.  B.  C,  411.) 


§  20.  When  Capital  Stock  Must  be  Paid  In.— At  least  fifty  per 
centum  of  the  capital  stock  of  every  association  shall  be  paid 
in  before  it  shall  be  authorized  to  commence  business;  and  the 
remainder  of  the  capital  stock  of  such  association  shall  be  paid 
in  installments  of  at  least  ten  per  centum  each,  on  the  whole 
amount  of  the  capital  as  frequently  as  one  installment  at  the  end 
of  each  succeeding  month  from  the  time  it  shall  be  authorized  by 
the  Comptroller  of  the  Currency  to  commence  business;  and  the 
payment  of  each  installment  shall  be  certified  to  the  Comptroller, 
under  oath,  by  the  president  or  cashier  of  the  association.  (Rev. 
Stat.  U.  S.  Sec.  5140.) 

Payment  of  Subscbiptions. — Probably  the  theory  of  the  law  is,  that 
each  subscriber  shall  pay  half  of  his  subscription  down,  and  the  re- 
mainder in  five  equal  monthly  installments;  this  is  really  what  a  sub- 
scriber to  National  bank  stock,  who  is  expected  to  know  the  law,  agrees 
to  do,  but  the  Comptroller  does  not  usually  require  a  certificate  in 
detail,  but  only  that  capital  amounting  to  50  per  cent.,  or  10  per  cent., 
as  the  case  may  be,  has  in  the  aggregate  been  paid  in.  It  is  sometimes 
convenient  for  some  subscribers  to  pay  more  at  once,  and  this  enables 
the  officers  to  certify  the  payments  necessary  to  comply  with  the  letter 
of  the  law,  without  waiting  for  the  slower  subscribers.  When  this  plan 
is  adopted  in  order  to  hold  the  other  subscribers,  a  contract  should  be 
entered  juto  With  them.    (See  note  to  next  section.) 


33 

Cebtifyino  Payments. — This  is  the  certificate  required  by  section 
5168,  par.  22,  post,  that  fifty  per  cent,  of  the  capital  stock,  called  the  first 
Installment  has  been  paid.  Upon  the  receipt  of  this  the  Comptroller 
may,  if  bonds  have  been  deposited,  authorize  the  bank  to  commence 
business.  The  date  of  the  Comptroller's  certificate  of  authority  to 
commence  business  fixes  the  date  of  the  payment  of  the  succeeding  in- 
stallments. The  Comptroller's  office  furnishes  blanks  upon  which  to 
certify  payment  of  capital.    (For  form,  see  page  219.) 

§  21.  Failure  to  Pay  Installments  on  Stock — Sale  of  Stock — 
Restoring  Capital  so  Reduced. — Whenever  any  shareholder,  or  his 
assignee,  fails  to  pay  any  installment  on  the  stock  when  the  same 
is  required  by  the  preceding  section  to  be  paid,  the  directors  of 
such  association  may  sell  the  stock  of  such  delinquent  shareholder 
at  public  auction,  having  given  three  weeks'  previous  notice  thereof 
in  a  newspaper  published  and  of  general  circulation  in  the  city  or 
county  where  the  association  is  located,  or  if  no  newspaper  is 
published  in  said  city  or  county,  then  in  a  newspaper  publsihed 
nearest  thereto,  to  any  person  who  will  pay  the  highest  price  there- 
for, to  be  not  less  than  the  amount  then  due  thereon,  with  the 
expenses  of  advertisement  and  sale;  and  the  excess,  if  any,  shall  be 
paid  to  the  delinquent  shareholder.  If  no  bidder  can  be  found 
who  will  pay  for  such  stock  the  amount  due  thereon  to  the  as- 
sociation, and  the  cost  of  advertisement  and  sale,  the  amount  pre- 
viously paid  shall  be  forfeited  to  the  association,  and  such  stock 
shall  be  sold  as  the  directors  may  order  within  six  months  from 
the  time  of  such  forfeiture,  and  if  not  sold  it  shall  be  cancelled  and 
deducted  from  the  capital  stock  of  the  association.  If  any  such 
cancellation  and  reduction  shall  reduce  the  capital  of  the  asso- 
ciation below  the  minimum  of  capital  required  by  law,  the  capital 
stock  shall,  within  thirty  days  from  the  date  of  such  cancellation, 
be  increased  to  the  required  amount;  in  default  of  which  a  re- 
ceiver may  be  appointed,  according  to  the  provisions  of  section 
fifty-two  hundred  and  thirty-four,  to  close  up  the  business  of  the 
association.     (Rev.  Stat.  F.  S.  Sec.  5141.) 

Subsceiber's  Liability. — This  section  is  entirely  for  the  direction  of 
bank  managers,  and  points  out  the  proper  course  to  be  taken  in 
bringing  in  the  capital  of  the  bank.  It  must  be  remembered  that  from 
the  time  of  his  subscription  a  person  becomes  a  shareholder,  and  that 
all  the  shareholders  have  entered  into  a  contract  among  themselves, 
and  are  mutually  responsible  to  each  other.    If  only  five  persons  start 


34 

the  bank,  and  subscribe  for  all  the  stock,  with  the  purpose  of  after- 
ward distributing  the  same  among  a  number  of  parties,  it  is  well  for 
each  of  the  five  associates  to  have  his  distributees  selected  and  to  bind 
them  by  a  formal  contract  with  himself  to  each  take  the  stock  he 
destines  for  them. 

Legal  Status  of  Stock. — The  stock  doubtless  has  a  legal  standing 
before  a  single  payment  is  made,  and  the  association  may  be  legally 
organized  and  become  a  body  corporate  before  a  single  dollar  of  the 
capital  is  paid  in  by  anyone.  Thus  sales  or  transfers  of  stock  may  take 
place  before  any  capital  is  paid  in.  This  is  in  line  with  the  decision 
of  the  United  States  Supreme  Court  in  Van  Allen  v.  Assessors  (3  Wall., 
573),  which  holds  a  share  of  stock  to  be  an  entity  distinct  from  capital. 
The  actual  holder  or  subscriber,  in  whose  name  the  stock  stands  on  the 
books  of  the  bank  at  the  time  the  directors  call  for  the  payment  of  the 
first  installment  of  50  per  cent,  must  pay  it,  and  payment  can  doubtless 
be  compelled  by  legal  proceedings.  The  section  under  consideration 
does  not  refer  to  this  first  installment,  but  to  the  subsequent  install- 
ments, the  dates  of  payment  of  which  were  fixed  by  the  preceding 
section.  The  whole  tenor  of  section  5141  implies  a  previous  payment 
of  50  per  cent.,  which  is  in  the  nature  of  a  forfeit,  if  the  stock  has  to 
be  sold  on  account  of  failure  to  meet  the  subsequent  installments. 

Limit  for  Paying  in  Capital. — A  new  association  would,  stric.tly,  under 
this  section,  have  the  following  time  to  make  good  its  capital  before  a 
receiver  could  be  appointed;  First,  the  time  until  the  installment  be- 
came due;  then  three  weeks  for  notice  by  publication;  then  six  months 
from  forfeiture  to  cancellation;  and,  fianlly,  thirty  days  longer  in  which 
to  bring  up  capital  to  required  amount.  How  capital  is  to  be  made  good 
in  such  case  is  not  distinctly  stated,  but  probably  by  assessment  on 
remaining  stockholders.     (See  section  120.) 

§  22.  Comptroller  to  Betermine  if  Association  is  Entitled  to 
Commence  Business. — ^Whenever  a  certificate  is  transmitted  to 
the  Comptroller  of  the  Currency,  as  provided  in  this  Title,  and 
the  association  transmitting  the  same  notifies  the  Comptroller  that 
at  least  fifty  per  centum  of  its  capital  stock  has  been  duly  paid  in, 
and  that  such  association  has  complied  with  all  the  provisions  of 
this  Title  required  to  be  complied  with  before  an  association  shall 
be  authorized  to  commence  the  business  of  banking,  the  Comp- 
troller shall  examine  into  the  condition  of  such  association,  as- 
certain especially  the  amount  of  money  paid  in  on  account  of  its 
capital,  the  name  and  place  of  residence  of  each  of  its  directors, 
and  the  amount  of  the  capital  stock  of  which  each  is  the  owner  in 


35 

good  faith,  and  generally  whether  such  association  has  complied 
with  all  the  provisions  of  this  Title  required  to  entitle  it  to 
engage  in  the  business  of  banking;  and  shall  cause  to  be  made 
and  attested  by  the  oaths  of  a  majority  of  the  directors,  and  by 
the  president  or  cashier  of  the  association,  a  statement  of  all  the 
facts  necessary  to  enable  the  Comptroller  to  determine  whether 
the  association  is  lawfully  entitled  to  commence  the  business  of 
banking.     (Kev.  Stat.  U.  S.  Sec.  5168.) 

Certificate  of  Officers  and  Directors. — The  certificate  described  in 
this  section  is  that  known  in  the  Comptroller's  oflace  as  "  Certificate  of 
Officers  and  Directors."  The  certificate  contains  the  notification  and 
statements  mentioned  in  the  section.     (For  form  see  page  219.) 

Preliminary  Examination. — ^The  Comptroller  has  under  this  and  the 
subsequent  section  the  right  to  send  an  examiner  to  ascertain  whether 
the  incorporators  have  complied  with  requirements  before  granting  his 
certificate  of  authority  to  commence  business.  When  an  incorporated 
State  bank  becomes  a  National  bank  by  conversion  the  Comptroller  has 
an  examination  made  to  ascertain  fully  the  character  of  the  assets  of 
the  bank  converting  before  granting  a  charter.  If  the  bank  is  or- 
ganized de  novo,  the  examination  is  not  ordered  until  after  the  bank  has 
begun  business.  If  the  bank  is  a  reorganization  of  a  State  or  private 
bank,  the  Comptroller  requires  a  statement  signed  by  the  directors  to 
the  effect  that  any  assets  purchased  from  the  State  or  private  bank  it 
succeeds  will  not  include  real  estate  (other  than  the  banking  premises), 
stocks  of  other  corporations,  loans  secured  by  real  estate,  or  loans  in 
excess  of  10  per  cent,  of  the  paid-in  capital  stock,  of  the  National  bank. 

§  23.  Certificate  of  Authority  to  Commence  Business. — If, 
upon  a  careful  examination  of  the  facts  so  reported,  and  of  any 
other  facts  which  may  come  to  the  knowledge  of  the  Comptroller, 
whether  by  means  of  a  special  commission  appointed  by  him  for 
the  purpose  of  inquiring  into  the  condition  of  such  association,  or 
otherwise,  it  appears  that  such  association  is  lawfully  entitled  to 
commence  the  business  of  banking,  the  Comptroller  shall  give  to 
such  association  a  certificate,  under  his  hand  and  ofiBcial  seal,  that 
such  association  has  complied  with  all  the  provisions  required  to 
be  complied  with  before  commencing  the  business  of  banking, 
and  that  such  association  is  authorized  to  commence  such  business. 
But  the  Comptroller  may  withhold  from  an  association  his  cer- 
tificate authorizing  the  commencement  of  business,  whenever  he 


36 

has  reason  to  suppose  that  the  shareholders  have  formed  the  same 
for  any  other  than  the  legitimate  objects  contemplated  by  this 
Title.    (Rev.  Stat.  U.  S.  Sec.  5169.) 

See  note  to  preceding  section. 

§  24.  Publication  of  Comptroller's  Certificate. — The  association 
shall  cause  the  certificate  issued  under  the  preceding  section  to 
be  published  in  some  newspaper  printed  in  the  city  or  county 
where  the  association  is  located  for  at  least  sixty  days  next  after 
the  issuing  thereof;  or,  if  no  newspaper  is  published  in  such  city 
or  county,  then  in  the  newspaper  published  nearest  thereto.  (Rev. 
Stat.  U.  S.  Sec.  5170.) 

This  refers  to  the  certificate  of  authority  to  begin  business.  An  inser- 
tion in  a  weekly  newspaper  or  in  a  weekly  edition  of  a  daily  newspaper 
during  the  sixty  days  is  suflacient.  The  Comptroller  requires  the  pub- 
lisher's oath  of  publication  and  a  copy  of  the  paper  containing  the  notice 
as  evidence  of  publication  for  the  time  required. 

§  25.  Increase  of  Capital  Stock. — Any  National  banking  asso- 
ciation may,  with  the  approval  of  the  Comptroller  of  the  Currency, 
by  the  vote  of  shareholders  owning  two-thirds  of  the  stock  of  such 
association,  increase  its  capital  stock,  in  accordance  with  existing 
laws,  to  any  sum  approved  by  the  said  Comptroller,  notwithstand- 
ing the  limit  fixed  in  its  original  articles  of  association  and  deter- 
mined by  said  Comptroller ;  and  no  increase  of  the  capital  stock  of 
any  National  banking  association,  either  within  or  beyond  the 
limit  fixed  in  its  original  articles  of  association,  shall  be  made 
except  in  the  manner  herein  provided.  (Act  May  1,  1886,  Ch.  73, 
Sec.  1;  24U.  S.  Stat.,  p.  18.) 

Obsolete  (Provisions  in  Articles  of  Association. — ^Prior  to  the  Act 
of  1886,  the  statute  provided  that  "  Any  association  formed  under  this 
title  may,  by  its  articles  of  association,  provide  for  an  increase  of  its 
capital  from  time  to  time,  as  may  be  deemed  expedient,  subject  to  the 
limitations  of  this  title.  But  the  maximum  of  such  increase  to  be  pro- 
vided in  the  articles  of  association  shall  be  determined  by  the  Comp- 
troller of  the  Currency."  (Rev.  Stat.  U.  S.  Sec.  5142.)  Many 
banks,  therefore,  have  a  provision  of  this  character  in  their  ar- 
ticles of  association.  But  this  is  now  obsolete.  It  is  no  longer  necessary 
to  insert  in  the  articles  of  association  provisions  for  an  increase  of 


37 

capital  stock;  for  shareholders  owning  two-thirds  of  the  shares  may 
Increase  the  capital  stock  at  any  time  and  to  any  amount,  subject  only 
to  the  approval  of  the  Comptroller  of  the  Currency,  and  this  notwith- 
standing that  the  articles  of  association  contain  a  provision  fixing  a 
maximum  limit. 

By  Whom  Increase  Authorized. — The  increase  must  now  he  made  by 
the  shareholders,  and  not  by  the  directors,  and  all  provisions  in  the 
articles  of  association  of  banks  organized  prior  to  May  1,  1886,  au- 
thorizing directors  to  increase  the  stock,  have  become  wholly  nugatory. 

Procedure. — "When  it  is  desired  to  increase  the  capital  stock  the 
Comptroller  should  be  advised  of  the  fact  and  of  the  amount  of  the 
proposed  increase,  as  his  approval  is  necessary.  If  the  condition  of  the 
bank  warrants  the  increase,  he  promptly  gives  his  approval,  and  sends 
full  instructions  with  blanks  necessary  to  be  executed  and  filed  in  his 
office.  The  next  step  is  to  call  a  meeting  of  shareholders  and  secure 
the  adoption  of  a  suitable  resolution  authorizing  the  increase.  This 
meeting  must  be  duly  called,  and  the  resolution  must  receive  the  votes 
of  shareholders  representing  at  least  two-thirds  of  the  existing  stock. 
Then  subscriptions  for  the  new  stock  may  be  taken.  When  all  the  new 
stock  shall  have  been  subscribed  and  paid  for,  the  payment  should  be 
certified  to  the  Comptroller  of  the  Currency  by  the  president  or  cashier. 
(Forms  to  be  used  in  making  the  increase  will  be  found  on  page  319.) 

The  increase  becomes  effective  on  the  date  of  the  issue  of  the  Comp- 
troller's certificate,  and  the  books  of  the  bank  should  not  be  changed 
nor  the  certificates  of  stock  issued  prior  thereto. 

Waives  of  Formalities. — The  National  Bank  Act  confers  upon  the 
National  banks  the  abstract  power  to  increase  their  capital  stock,  and 
such  power  exists  independently  of  the  separate  steps  required  to  be 
taken  by  the  stockholders  in  the  exercise  of  the  power;  and  hence  any 
irregularities  or  informalities  in  the  exercise  of  that  power  may  be 
waived  by  the  subscriber.    (Latimer  v.  Bard,  76  Fed.  Rep.,  536.) 

Increase  of  Capital  from  Surplus. — Occasionally  it  is  found  desirable  * 
where  a  bank  has  accumulated  a  surplus  in  excess  of  the  twenty  per 
cent,  required  to  be  maintained  to  convert  the  excess  (and  only  the  ex- 
cess can  be  used )  into  capital.  This  may  be  accomplished  in  the  following 
manner:  Declare  and  pay  a  pro  rata  dividend,  the  proceeds  to  be 
accepted  in  payment  for  the  new  stock,  issued  as  the  result  of  the 
legal  adoption  of  a  resolution  providing  for  the  increase.  In  no  other 
manner  can  surplus  be  capitalized.  The  directors  have  the  right  to 
make  dividends  from  excess  surplus  as  from  other  profits,  but  the  right 
remains  with  the  shareholders  to  dispose  of  the  proceeds  as  they  shall 
determine. 


I 
I 


38 

Right  of  Shakeholders  to  Subscribe  for  New  Shares. — It  is  a  gen- 
eral rule  of  law  that  where  the  capital  stock  of  a  corporation  is  in- 
creased each  shareholder  has  a  right  of  pre-emption  to  the  new  stock 
in  proportion  to  his  shares  in  the  original  stock.  So  that  any  provision 
In  the  articles  of  association  is  not  actually  necessary.  But  shareholders 
may,  of  course,  waive  their  right  to  take  the  new  stock,  and  this  is 
frequently  done.  And  the  waiver  need  not  be  expressed;  it  may  be 
given  tacitly.  It  may  be  implied  from  the  failure  of  the  shareholder 
to  avail  himself  of  his  right  within  a  reasonable  time.  But  the  safer 
course,  and  the  one  which  the  directors  and  officers  should  generally 
adopt,  is  to  have  the  waiver  given  in  writing.  In  this  matter  each 
shareholder  is  bound  only  by  his  own  action;  he  can  not  be  deprived  of 
his  right  of  pre-emption  by  any  vote  or  assent  of  the  other  shareholders, 
notwithstanding  they  may  own  two-thirds,  or  more,  of  the  stock. 

§  26.  When  Increase  of  Capital  Stock  Becomes  Valid. — l^o  in- 
crease of  capital  shall  be  valid  until  the  whole  amount  of  such 
increase  is  paid  in,  and  notice  thereof  has  been  transmitted  to 
the  Comptroller  of  the  Currency,  and  his  cei^ificate  obtained 
specifying  the  amount  of  such  increase  of  capital  stock,  with  his 
approval  thereof,  and  that  it  has  been  duly  paid  in  as  part  of  the 
capital  of  such  association.     (Rev.  Stat.  TJ.  S.  Sec.  5142.) 

Comptroller's  Approval — Recovery  of  Money  Pah)  Where  Increase 
Not  Made. — The  stock  of  a  National  bank  can  not  be  lawfully  increased 
before  the  entire  amount  of  the  new  capital  has  been  paid  in  and  the 
Comptroller  of  the  Currency  has  certified  to  the  increase  and  to  the  fact 
of  payment  in  the  mode  prescribed  by  Section  5142,  Rev.  Stat.  U.  S. 
(Cornell's  Executors  v.  First  National  Bank  of  Kansas  City,  32  U.  S. 
App.,  426;  McFarlin  v.  National  Bank  of  Kansas  City,  68  Fed.  Rep.,  868; 
Charleston  v.  People's  National  Bank,  5  S.  C,  103.)  But  perhaps  a  case 
may  arise  where  a  subscriber  would  be  estopped  from  asserting,  as 
against  a  creditor,  that  he  was  not  a  stockholder,  even  though  the  pro- 
visions of  the  statute  had  not  been  strictly  followed.  (McFarlin  v. 
First  National  Bank  of  Kansas  City,  supra.)  And  the  provision  of  the 
statute  as  to  payment  does  not  create  a  condition,  express  or  implied, 
that  shares  subscribed  and  paid  for  in  full  are  not  valid  unless  the 
entire  amount  of  the  proposed  increase  is  subscribed  and  paid  for  in 
ful.  (Scott  V.  Latimer,  89  Fed.  Rep.,  843.)  Where  money  paid  in  on 
subscriptions  to  an  increase  of  capital  is  received  by  a  bank  as  a  trust 
fund  to  be  applied  to  that  purpose,  and  before  the  increase  is  approved 
by  the  Comptroller  and  his  certificate  issued,  the  bank  fails,  the  money 
so  paid  may  be  recovered  by  the  subscribers.     (Id.) 


39 

Whebe  Whole  Amount  of  Increase  is  Not  Taken. — The  U.  S.  Su- 
preme Court  in  case  of  Aspinwall  v.  Butler,  133  U.  S.,  565,  has  held 
that  where  an  increase  of  the  capital  stock  is  authorized  in  a  certain 
sum  there  is  no  implied  condition  that  a  subscription  shall  be  void  if 
the  whole  amount  so  authorized  is  not  subscribed.  (See  also  Delano  v. 
Butler,,  118  U.  S.,  634.)  Therefore,  where  a  shareholder  subscribes 
his  additional  share  towards  doubling  the  capital  and  pays  his  sub- 
scriptions, the  fact  that  the  stockholders,  with  the  assent  of  the 
Comptroller,  reduce  the  amount  of  the  stock  they  had  proposed  to  issue, 
does  not  permit  him  to  repudiate  his  subscription  and  recover  the 
money  paid  on  it.  (Pacific  National  Bank  v.  Eaton,  141  U.  S.,  227.) 
But  if  there  were  a  large  and  material  deficiency  in  the  amount  of 
capital  contemplated,  equity  might  interfere  to  protect  subscribers. 
(Aspinwall  v.  Butler,  133  U.  S.,  595.) 

In  1892  the  stockholders  of  the  C.  National  Bank  voted  to  increase 
capital  $300,000.  M.  subscribed  for  twenty-three  shares  of  such  increase 
and  paid  in  his  subscription.  The  full  amount  was  not  subscribed. 
The  President  and  Cashier  called  a  meeting  of  stockholders  in  1895, 
and  an  increase  of  capital  stock  of  $150,000  was  authorized  and  ap- 
proved by  the  Comptroller.  M.  was  not  present  at  the  meeting,  though 
one  B.,  who  held  a  proxy  authorizing  him  to  represent  M.'s  stock,  was 
present.  Held,  That  the  subsequent  action  of  the  stockholders  was  not 
binding  upon  M.,  and  that  he  could  recover  the  amount  paid  in  by  him. 
(Matthews  v.  Columbia  National  Bank,  79  Fed.  Rep.,  558.) 

In  an  action  to  recover  money  deposited  with  a  National  bank  the 
plaintiff  may  show  that  stock  issued  by  the  bank  in  his  name  was  is- 
sued to  him  merely  as  collateral  security  for  such  deposit.  (Williams 
V.  American  National  Bank  of  Arkansas  City,  85  Fed.  Rep.,  376.)  And 
it  is  no  defense  to  the  bank  that  the  stock  was  issued  without  au- 
thority of  law.     {Id.) 

Fixing  Price  of  New  Stock. — Generally,  as  a  result  of  increase  of 
capital,  the  additional  shares  of  stock  are  issued  and  sold  at  par.  Oc- 
casionally, however,  it  is  preferred  to  increase  the  surplus  in  the  same 
proportion  as  the  capital;  that  is,  to  sell  the  new  shares  at  the  book  or 
market  value  of  the  old  stock.  In  such  cases  it  is  customary  to  incor- 
porate in  the  resolution  for  the  increase  of  capital  a  provision  fixing 
the  price,  or  conferring  upon  the  Directors  authority  to  do  so.  At 
common  law,  and  generally  under  the  Articles  of  Association,  share- 
holders are  entitled  to  participate  in  an  increase  of  stock  pro  rata. 
But  whether  they  are  entitled  to  take  the  stock  at  par  or  whether  the 
price  may  be  fixed  at  a  higher  sum,  is  a  mooted  question,  and  has 
never  been  determined  in  a  case  where  a  National  bank  was  a  party. 
But,  of  course,  there  is  no  difliculty  where  all  consent. 


40 

§  27.  Bednction  of  Capital  Stock. — Any  association  formed 
under  this  Title  may,  by  the  vote  of  shareholders  owTiing  two- 
thirds  of  its  capital  stock,  reduce  its  capital  to  any  sum  not  below 
the  amount  required  by  this  Title  to  authorize  the  formation  of 
associations;  but  no  such  reduction  shall  be  allowable  which,  will 
reduce  the  capital  of  the  association  below  the  amount  required 
for  its  outstanding  circulation,  nor  shall  any  such  reduction  be 
made  until  the  amount  of  the  proposed  reduction  has  been  reported 
to  the  Comptroller  of  the  Currency  and  his  approval  thereof  ob- 
tained.    (Eev.  Stat.  U.  S.  Sec.  5143.) 

Procedure. — In  reducing  capital  it  is  best  first  to  advise  the  Comp- 
troller to  be  assured  of  his  approval,  which  is  necessary  and  which  will 
be  given  only  if  he  is  satisfied  the  bank  is  solvent.  He  will  instruct 
how  to  proceed  and  furnish  forms.  The  next  step  is  to'call  a  meeting  of 
stockholders,  which  should  be  done  in  the  manner  pointed  out  in  note 
to  the  next  section.  The  shareholders  should  then  adopt  a  resolution 
authorizing  a  reduction  of  the  stock.  The  votes  in  favor  must  repre- 
sent two-thirds  or  more  of  all  the  stock  of  the  bank.  It  is  not  sufficient 
that  two-thirds  of  a  quorum  vote  in  favor  of  it.  The  resolution  should 
state  the  intention  of  the  stockholders  clearly,  but  it  is  not  reQuired  to 
be  in  any  special  form.  If  it  is  desired  that  the  reduction  shall  take 
effect  from  a  certain  date,  a  provision  to  that  effect  should  be  inserted 
in  the  resolution;  otherwise,  the  reduction  will  take  effect  from  the 
date  on  which  the  Comptroller  gives  his  formal  approval.  (For  forms, 
see  page  320.) 

Usually  the  course  is  for  each  stockholder  to  relinquish  and  surrender 
up  to  be  cancelled  a  pro  rata  portion  of  his  stock.  But  if  some  of  the 
stockholders  are  willing  to  surrender  enough  of  their  stock  to  make  up 
the  whole  amount  of  the  reduction,  there  is  no  necessity  that  the  hold- 
ings of  the  other  stockhoders  should  be  reduced  at  all.  The  issue  of 
fractional  shares  is  sometimes  unavoidable,  and  is  permitted. 

When  Capital  Can  Not  Be  Reduced. — The  capital  stock  cannot  be 
reduced  below  the  minimum  amount  of  capital  required  by  Section  5138, 
R.  S,  (See  Sec.  18),  nor  can  a  bank  reduce  its  capital  below  the 
amount  required  for  a  new  bank  in  the  same  place,  although  the 
population  of  such  place  at  the  time  such  bank  was  organized  would 
have  permitted  of  an  organization  with  a  smaller  capital.  As  to 
whether  a  National  bank  which  did  not  obtain  the  approval  of  the 
Secretary  of  the  Treasury  to  organize  with  a  capital  stock  of  less  than 
$100,000,  but  organized  with  that  amount  or  more,  can  reduce  its 
capital  below  $100,000,  there  is  a  difference  of  opinion,  and  different 
Comptrollers  have  held  variously  on  the  subject.    But,  considering  that 


41 

It  is  a  fundamental  rule  of  law,  that  ;here  can  be  no  change  whatever 
made  in  the  capital  stock  of  a  corporation,  unless  there  is  a  clear  au- 
thority found  in  the  statute  to  make  such  a  change,  we  would  say  that 
it  would  be  unsafe  for  any  bank  to  make  such  a  reduction.  The 
important  question  is  not  whether  the  Comptroller  will  approve  of 
the  reduction,  but  what  are  the  liabilities  of  the  stockholders  and  di- 
rectors in  such  a  case;  for,  if  the  statute  does  not  authorize  such  a 
change  in  the  capital  stock,  the  approval  of  the  Comptroller  can  afford 
them  no  protection,  and  the  risks  they  incur  are  very  serious. 

Capital  Set  Free  Can  Not  be  Retained  by  Bank. — The  capital  stock 
set  free  by  reduction  belongs  to  the  stockholders,  in  proportion  to  the 
number  of  shares  held  by  each,  and  it  must  be  returned  to  them;  it  can 
not  be  retained  by  the  bank  for  a  surplus  fund,  or  for  any  other  purpose. 
In  this  matter  the  directors  have  no  discretion.  (Seeley  v.  New  York 
National  Exchange  Bank,  8  Daly,  400;  affirmed,  78  N.  Y.,  608.)  Nor  can 
its  retention  by  the  bank  be  authorized  by  a  majority  of  the  stock- 
holders, no  matter  how  large.  Each  stockholder  is  entitled  to  his  por- 
tion, and  can  not  be  deprived  of  it  against  his  own  consent.  But  fre- 
quently shareholders  waive  their  right  and  agree  to  leave  it  with  the 
bank  to  be  used  for  a  surplus  fund  or  otherwise. 

Reduction  of  Capital  to  Meet  Impairment. — In  reduction  to  meet 
impairment  of  capital  there  can  be  no  withdrawal  of  assets;  for,  prima 
facie,  any  further  withdrawal  of  assets  would  result  in  still  further  im- 
pairment of  the  capital.  (McCann  v.  First  National  Bank  of  Jefferson- 
ville,  112  Ind.^  354.)  In  the  case  cited  the  capital  of  a  National  bank 
having  become  impaired  by  the  non-payment  of  the  interest  on  some 
paper  among  its  assets,  to  the  amount  of  $71,000,  in  order  to  avoid  an 
assessment  by  the  Comptroller,  the  stockholders  reduced  its  capital 
stock,  and  carried  the  bills  and  notes  to  the  account  of  suspended  or 
"  bad  debts,"  which  were  not  thereafter  included  as  assets,  although  re- 
tained in  its  custody.  Some  years  afterwards  the  bank  realized  $75,000 
from  collaterals  pledged  for  the  security  of  that  paper,  and  a  stock- 
holder brought  an  action  to  recover  his  share  of  the  amount  reaJized, 
proportioned  to  the  amount  of  stock  surrendered:  Held,  That  he  could 
not  recover. 

Relation  of  Shareholders  to  Chabged-off  Assets. — ^Where  the  capi- 
tal of  a  National  bank  has  been  reduced  to  obviate  an  assessment  to 
make  good  an  impairment,  the  relation  of  shareholders  to  the  charged- 
off  assets  is  the  same  as  though  the  reduction  of  capital  had  not  been 
made  for  that  purpose,  for  the  reason  that  a  reduction  under  such  cir- 
cumstances would  not  be  given  favorable  consideration  by  the  Comp- 
troller of  the  Currency,  unless  as  a  result  the  remaining  assets,  after 
charging  off  doubtful  and  worthless  assets  equivalent  in  face  value  to 


42 

the  capital  set  free  by  reduction,  equalled  or  exceeded  in  actual  value 
the  bank's  aggregate  liabilities  to  depositors  and  other  creditors,  and  in 
addition  the  capital  stock  as  reduced.  Authority  to  reduce  capital  stock 
as  a  result  of  the  withdrawal  of  instructions  to  levy  and  pay  an  assess- 
ment to  make  good  an  impairment  is  granted  by  the  Comptroller  of  the 
Currency  upon  condition  that  no  portion  of  the  reduced  capital  will  be 
paid  to  shareholders  in  cash  except  such  sums  as  may  be  realized  from 
assets  charged  off  representing  the  amount  of  the  reduction  of  stock. 
In  this  position  the  right  of  shareholders  to  the  proceeds  of  the  charged- 
off  assets  is  recognized.  Ordinarily  such  assets  are  trusted  for  collec- 
tion and  distribution  to  shareholders  of  record  at  date  of  the  reduction, 
unless  by  unanimous  action  of  shareholders  authority  is  conferred 
upon  the  Directors  to  credit  collections  from  such  charged-off  assets  to 
the  bank's  profit  account. 

§  28.  Eights   of  Shareholders   at  Elections — Proxies. — In   all 

elections  of  directors,  and  in  deciding  all  questions  at  meetings  of 
shareholders,  each  shareholder  shall  be  entitled  to  one  vote  on 
each  share  of  stock  held  by  him.  Shareholders  may  vote  by 
proxies  duly  authorized  in  writing;  but  no  officer,  clerk,  teller,  or 
book-keeper  of  such  association  shall  act  as  proxy;  and  no  share- 
holder whose  liability  is  past  due  and  unpaid  shall  be  allowed  to 
vote.     (Kev.  Stat.  U.  S.  Sec.  5144.) 

Shabeholders'  Meetings. — ^The  articles  of  association  and  by-laws  of 
banks  usually  provide  that  meetings  of  shareholders  shall  be  called  by 
publishing  notice  thereof  for  thirty  days  in  a  newspaper,  or  by  notifying 
the  shareholders  individually  in  writing.  The  latter  is  probably  the 
method  most  commonly  used.  In  the  absence  of  any  regulation  on  the 
subject,  the  better  course  would  seem  to  be  to  send  each  shareholder 
written  or  printed  notice  the  customary  thirty  days  in  advance  to  avoid 
any  question  as  to  the  legality  of  the  meeting.  For  want  of  due  notice 
to  the  shareholders  the  proceedinc^s,  unless  acquiesced  in  or  ratified  by 
all,  may  be  set  aside  as  invalid. 

When  any  act  to  be  done  by  the  association  requires  the  assenl  of  the 
shareholders,  their  assent,  unless  unanimous,  must  be  given  at  a  duly 
convened  meeting  of  shareholders.  The  assent  in  writing  of  share- 
holders owning  the  requisite  amount  of  stock  is  not  sufficient,  and  will 
not  be  binding  upon  any  non-assenting  shareholder.  The  action  of  a 
majority,  no  matter  how  large,  can  not  be  binding  upon  a  minority,  no 
matter  how  small,  when  not  taken  at  a  meeting  of  shareholders  at 
which  every  shareholder  has  an  opportunity  to  be  represented,  either 
in  person  or  by  proxy.  The  only  exception  to  this  rule  is  in  the  case 
of  the  amendment  of  the  articles  of  association  extending  the  period 


43 

of  corporate  existence,  the  consent  of  the  shareholders  to  which  the 
law  expressly  authorizes  to  be  given  in  writing. 

The  mistake  is  frequently  made  of  supposing  that  business  requiring 
the  action  of  the  stockholders  can  be  transacted  at  a  meeting  of  the 
board  of  directors  when  the  directors  own  a  majority  of  the  stock,  or 
the  amount  of  stock  necessary  to  determine  the  actions  of  the  share- 
holders, in  respect  to  such  business  at  a  shareholders'  meeting.  But 
the  rule  of  law  is  that  every  stockholder  has  a  right  to  be  present  at 
the  meeting,  and  to  express  his  assent  or  dissent;  and  this  he  has,  of 
course,  no  opportunity  of  doing  when  the  business  is  considered  at  a 
meeting  of  the  directors.  A  meeting  of  shareholders  must  be  duly 
called. 

Where  the  articles  of  association  of  a  National  bank  provide  that 
meetings  of  the  stockholders  may  be  called  by  the  board  of  directors 
or  by  any  three  stockholders,  a  meeting  called  by  the  President  and 
Cashier  is  not  lawfully  convened.  (Matthews  v.  Columbia  National 
Bank,  79  Fed.  Rep.,  558.) 

Cumulate  Voting.. — The  laws  of  some  of  the  States  authorize  stock- 
holders at  corporate  meetings  held  to  elect  directors  to  cumulate  their 
votes;  that  is,  if  a  stockholder  is  entitled  to  one  vote  on  each  share  of 
stock  held,  he  might  concentrate  his  entire  vote  in  favor  of  one  candi- 
date for  directorship,  instead  of  casting  an  equal  number  for  all  candi- 
dates. This  method  of  voting,  however,  not  being  authorized  by  the 
National  Banking  Law,  is  held  to  be  prohibited. 

Proxies. — There  is  some  doubt  whether  the  word  "  officer "  in  the 
provision  forbidding  any  '*  officer,  clerk,  teller,  or  book-keeper  "  to  act  as 
proxy,  means  only  an  executive  officer,  such  as  the  president,  vice-presi- 
dent, or  cashier,  or  whether  it  applies  as  well  to  a  director.  There  ap- 
pears to  have  been  no  judicial  decision  on  the  point.  The  view  for- 
merly taken  by  the  Comptrollers  of  the  Currency  was  that  a  director  is 
not  an  officer  within  the  intendment  of  this  provision.  But  the  contrary 
view  is  now  held.  The  closing  paragraph  of  Section  5240  would  seem 
to  sustain  this  ruling,  and  this  appears  to  better  conform  to  the  spirit 
of  the  law.  The  bank  is  under  the  control  of  the  directors,  and  they 
have  in  many  cases  a  great  personal  interest  in  the  action  of  the  meet- 
ing, especially  where  the  meeting  is  held  for  the  election  of  directors, 
and  they  are  candidates  for  re-election.  In  all  cases  it  is  better,  in 
order  to  avoid  any  question,  that  the  proxy  shall  be  a  person  not 
Identified  in  any  way  with  the  management  of  the  bank.  (For  form 
of  proxy,  see  page  319.) 

A  proxy  cannot  bind  his  principal  by  attending  at,  and  partici- 
pating in,  a  meeting  of  stockholders  not  lawfully  called.  (Matthews  v, 
Columbia  National  Bank,  79  Fed.  Rep.,  558.) 


44 

What  Liability  Disqualifies  Shakeholdeb  to  Vote. — The  provision 
of  this  section  which  disqualifies  shareholders  "  whose  liability  is  past 
due  and  unpaid  "  applies  only  where  the  liability  is  for  unpaid  subscrip- 
tions for  stock,  and  was  not  intended  to  disqualify  shareholders  other- 
wise indebted  to  the  bank.  (United  States  ex,  rel.  Cond.  v.  Barry,  36 
Fed.  Rep.,  246.) 

§  29.  Directors — ^Election  of — Term  of  Office — Annual  Meeting. 
— The  affairs  of  each  association  shall  be  managed  by  not  less  than 
five  directors,  who  shall  be  elected  by  the  shareholders  at  a  meeting 
to  be  held  at  any  time  before  the  association  is  authorized  by  the 
Comptroller  of  the  Currency  to  commence  the  business  of  banking; 
and  afterward  at  meetings  to  be  held  on  such  day  in  Januar}'^  of 
each  year  as  is  specified  therefor  in  the  articles  of  association.  The 
directors  shall  hold  ofiBce  for  one  year,  and  until  their  successors  are 
elected  and  have  qualified.    (Kev.  Stat.  U.  S.  Sec.  5145.) 

Annual  Meeting — Date  of — Business  at  Annual  Meetings — Repre- 
sentation.— The  annual  meeting  is  required  to  be  held  in  January,  but 
any  date  may  be  selected  in  that  month,  although  in  the  form  of  articles 
of  association  recommended  by  the  Comptroller  the  second  Tuesday  is 
named  and  commonly  adopted. 

At  the  regular  annual  meeting  no  business  other  than  the  election  of 
directors  can  be  transacted  without  the  required  notice  having  been 
given,  stating  that  other  business  will  be  transacted;  otherwise  the 
ratification  of  action  taken  should  be  obtained  from  shareholders  not 
present  at  the  meeting. 

No  provision  being  made  in  the  statute  for  any  definite  representation 
of  stock  at  annual  meetings,  the  number  of  shareholders  present  is  not 
material  to  the  legality  of  a  meeting. 

§  30.  Qualifications  of  Directors. — Every  director  must,  dur- 
ing his  whole  term  of  service,  be  a  citizen  of  the  United  States,  and 
at  least  three-fourths  of  the  directors  must  have  resided  in  the 
State,  Territory,  or  district  in  which  the  association  is  located, 
for  at  least  one  year  immediately  preceding  their  election,  and 
must  be  residents  therein  during  their  continuance  in  office.  Every 
director  must  own,  in  his  own  right,  at  least  ten  shares  of  the 
capital  stock  of  the  association  of  which  he  is  a  director.  Any 
director  who  ceases  to  be  the  owner  of  ten  shares  of  the  stock,  or 
who  becomes  in  any  other  manner  disqualified,  shall  thereby  vacate 
his  place.    (Rev.  Stat.  U.  S.  Sec.  5146.) 

See  note  Sec.  31,  post. 


Amendment  to  Sec.  5146,  February  28,  1905,  provides  that  a 
director  of  a  National  bank  of  capital  not  exceeding  $25,000  shall 
own  five  shares  of  stock  instead  of  ten  as  before  required. 


45 

§  31.  Oath  Required  of  Directors. — Each  director,  when  ap- 
pointed or  elected,  shall  take  an  oath  that  he  will,  so  far  as  the 
duty  devolves  on  him,  diligently  and  honestly  administer  the 
affairs  of  such  association,  and  will  not  knowingly  violate,  or 
willingly  permit  to  he  violated,  any  of  the  provisions  of  this  Title, 
and  that  he  is  the  o\\Tier  in  good  faith,  and  in  his  own  right,  of 
the  number  of  shares  of  stock  required  by  this  Title,  subscribed  by 
him  or  standing  in  his  name  on  the  books  of  the  association,  and 
that  the  same  is  not  hypothecated,  or  in  any  way  pledged,  as 
security  for  any  loan  or  debt.  Such  oath,  subscribed  by  the  direc- 
tor making  it,  and  certified  by  the  officer  before  whom  it  is  taken, 
shall  be  immediately  transmitted  to  the  Comptroller  of  the  Cur- 
rency, and  shall  be  filed  and  preserved  in  his  office.  (Kev.  Stat. 
U.  S.  Sec.  5147.) 

Qualifications  of  Directors. — From  the  foregoing  two  sections  it 
will  be  seen  that  several  things  are  required  to  qualify  a  person  for 
the  position  of  director.  He  must  be  a  citizen  of  the  United  States, 
must  own  in  his  own  right  not  less  than  ten  shares  of  the  stock  of  the 
bank;  in  case  of  a  newly-organized  bank  paying  for  same  as  assess- 
ments are  made,  and  he  must  hold  the  stock  free  from  pledge. 

As  the  stock  must  be  held  in  the  director's  own  right,  no  person 
who  holds  stock  in  a  merely  representative  capacity — as  an  executor, 
administrator,  guardian,  or  trustee — can  be  a  director. 

The  par  value  of  shares  not  being  stated,  ten  shares  of  a  converted 
bank,  though  of  lower  par  value,  meet  the  requirement. 

A  director  who  owns  more  than  ten  shares  of  stock  may  sell  or  pledge 
all  of  his  stock  except  ten  shares,  without  becoming  disqualified. 

At  least  three-fourths  of  the  directors  must  have  resided  in  the  State, 
Territory  or  district  where  the  bank  is  located,  for  one  year  immediately 
preceding  their  election,  and  must  be  residents  therein,  during  their 
continuance  in  office.  It  is  therefore  necessary  that,  in  a  Board  of  five, 
four  must  be  residents.     In  a  Board  of  seven,  six,  etc. 

An  unmarried  woman,  whether  a  widow  or  spinster,  can  be  a  director 
as  well  as  a  man;  and  so  may  a  married  woman  in  those  States  where 
the  laws  permit  her  to  assume  all  the  obligations  of  a  stockholder. 

Oath  of  Directors. — The  law  as  regards  directors*  oaths  Is  fatally 
defective  in  that  it  fails  to  provide  before  what  officer  it  may  be  taken. 
In  order  that  an  oath  can  have  any  efficacy  as  such,  and  especially  in 
order  that  an  indictment  for  perjury  may  be  sustained  thereon,  it  is 
requisite  that  the  oath  shall  have  been  prescribed  by  law,  and  that 
It  shall  have  been  taken  before  an  officer  duly  authorized  to  administer 


46 

It  The  act  of  February  26,  1881  (see  Sec.  126),  which  authorizes  an 
oath  to  be  taken  before  a  notary  public,  applies  only  to  the  oath  pre- 
scribed by  Section  5211,  Revised  Statutes — the  oath  to  the  report  of 
condition.  As  regards  the  other  oaths  prescribed  by  the  National  bank- 
ing law,  there  does  not  appear  to  be  any  officer  competent  to  administer 
them.  (United  States  v.  Curtis,  107  U.  S.,  671.)  The  Comptroller  re- 
quires them  to  be  taken,  but  they  have  no  legal  force. 

DiEECTOES  Can  Act  Only  as  a  Boaed. — The  election  of  a  person  as  a 
director  does  not  constitute  him  an  agent  of  the  corporation  with  au- 
thority to  act  separately  and  independently  of  his  fellow-members.  It 
is  the  board,  duly  convened  and  acting  as  a  unit,  that  is  made  the 
representative  of  the  bank.  The  assent  or  determination  of  the  mem- 
bers of  the  board  acting  separately  and  individually  is  not  the  assent  of 
the  corporation.  The  law  proceeds  upon  the  theory  that  the  directors 
shall  meet  and  counsel  with  each  other,  and  that  any  determination 
affecting  the  association  shall  be  arrived  at  and  expressed  only  after  a 
consultation  at  a  meeting  of  the  board  attended  by  a  quorum.  (National 
Bank  v.  Drake,  35  Kan.,  564.)  Frequently,  it  is  true,  a  director  does 
have  authority  to  bind  the  bank  when  acting  separately  and  apart 
from  the  others;  but  in  such  case  he  does  not  derive  his  authority  from 
his  position  as  director,  but  from  the  circumstance  that  he  has  been 
authorized  by  the  Board,  either  expressly  or  impliedly,  to  act  as  the 
agent  of  the  bank. 

What  Constitutes  a  Boabd. — A  quorum  generally  consists  of  a  ma- 
jority of  the  whole  board.  A  provision  to  this  effect  is  usually  contained 
in  the  articles  of  association  (see  form  of  articles  on  page  208),  though 
this  would  be  the  rule  in  the  absence  of  any  provision  whatever  on  the 
subject.  In  the  previous  editions  of  this  Digest  the  opinion  was  ex- 
pressed that  it  would  be  competent  for  the  stockholders  to  provide  that  a 
less  number  than  a  majority  shall  constitute  a  quorum,  and  we  still  be- 
lieve this  to  be  correct,  though  the  Comptroller  of  the  Currency  takes  a 
different  view.    The  point  has  not  been  judicially  determined. 

Where  a  majority  is  required  to  constitute  a  quorum,  this  means  a 
majority  of  a  full  board,  and  not  merely  a  majority  of  those  who  may  be 
members  at  the  time.  Thus,  should  there  be  a  vacancy  in  a  board  con- 
sisting of  ten  members,  six  would  still  be  necessary  to  make  a  quorum, 
though  five  would  be  a  majority  of  the  present  members.  Sometimes 
the  articles  of  association  do  not  provide  for  any  specific  number  of 
directors,  but  provide  that  the  board  shall  consist  of  not  less,  or  not 
more,  than  a  certain  number,  or  both,  as  for  instance,  "  The  board  of 
directors  shall  consist  of  not  less  than  five  and  not  more  than  ten  stock- 
holders." This  leaves  it  to  the  stockholders  to  determine  at  each  annual 
election  the  number  which  shall  constitute  a  full  board  for  the  ensuing 
year.    If,  in  such  a  case,  the  stockholders  do  not  manifest  their  intention 


47 

by  expressly  setting  it  forth  in  a  resolution,  it  is  to  be  gathered  from 
their  action  in  electing  a  certain  number  of  directors,  and  it  is  to 
be  supposed  that  the  number  so  elected  was  intended  to  constitute  the 
board  for  the  year;  and  the  effect  is  the  same  as  if  they  had  expressly 
provided  for  that  number  in  the  articles  of  association  or  otherwise. 
Vacancies  occurring  through  the  year  should,  therefore,  be  filled  as  in 
other  cases. 

Disqualification  and  Resignation. — It  would  seem  to  be  the  proper 
construction  of  the  law  that  where  a  director  becomes  disqualified,  this 
ipso  facto  vacates  his  place  in  the  board,  and  no  removal  by  the  other 
directors  is  necessary.  The  provision  that  the  directors  are  to  hold 
office  for  one  year  does  not  require  a  director  to  serve  for  the  whole 
term  for  which  he  was  elected,  and  prohibit  him  from  resigning  during 
such  term,  but  he  may  resign  at  any  time  during  the  year.  (Briggs  v. 
Spalding,  141  U.  S.,  132.)  The  apparent  purpose  of  the  provision,  in  re- 
gard to  the  term  of  office,  is  to  make  it  conform  to  the  time  of  the  new 
election,  and  not  to  absolutely  require  every  director  to  serve  the  full 
term.  (Movius  v.  Lee,  30  Fed.  Rep.,  298.)  The  resignation  of  a  di- 
rector should  be  tendered  to  the  board,  and  not  to  the  shareholders.  As 
the  president  is  the  head  of  the  board,  it  may  be  tendered  to  him. 
(Movius  V.  Lee,  30  Fed.  Rep.,  298.)  It  is  the  more  orderly  and  proper 
way  to  put  the  resignation  in  writing,  but  an  oral  resignation  tendered 
to  the  president  is  sufficient.  (Briggs  v.  Spalding,  141  U.  S.,  132.) 
Where  the  president  is  granted  a  leave  of  absence  on  account  of  ill 
health,  it  is  not  incumbent  upon  him  to  tender  his  resignation  as  a 
director,  at  the  peril  of  otherwise  being  held  liable  for  losses  that  may 
occur  during  his  absence  through  the  mismanagement  of  the  bank. 
ild.) 

LiABiLiTT  OF  DiEECTORS. — Directors  who  violate  any  of  the  provisions 
of  the  law  can  be  held  personally  liable  for  the  loss  resulting  to  the 
bank  therefrom.  Thus,  where  they  make  a  loan  in  excess  of  one-tenth 
of  the  capital  stock  of  the  bank,  in  violation  of  Section  5200,  Revised 
Statutes,  they  will  be  liable  to  the  bank  for  all  damages  sustained  by  it 
In  consequence  of  such  loan.    (See  on  this  subject  note  to  Section  165.) 

The  degree  of  care  required  of  the  directors  is  that  which  men  of 
ordinary  prudence  would  exercise  under  similar  circumstances,  and  in 
determining  this  the  restrictions  of  the  banking  law  and  the  usages  of 
business  should  be  taken  into  account.  The  question  is  ultimately  one 
of  fact,  to  be  determined  under  all  the  circumstances.  (Briggs  v.  Spald- 
ing, 141  U.  S.,  132;  Movius  v.  Lee,  30  Fed.  Rep.,  298.)  They  are  entitled 
under  the  law  to  commit  the  banking  business,  as  defined,  to  their  duly 
authorized  officers,  but  this  does  not  absolve  them  from  the  duty  of 
reasonable  supervision,  and  they  will  not  be  permitted  to  be  shielded 
from  liability  because  of  ignorance  or  wrong-doing,  if  such  ignorance  is 
the  result  of  gross  inattention.    (Id.) 


X 


48 

The  directors  of  a  National  bank  are  vested  with  a  sound  discretion 
in  the  matter  of  requiring  or  not  the  oflScers  of  their  bank  to  give  bond. 
But  special  circumstances  may  exist  which  will  render  them  personally 
liable  if  they  fail  to  require  such  bonds.  (Robinson  v.  Hall,  63  Fed. 
Rep.,  222.)  In  the  case  cited,  the  directors  left  the  management  of  the 
bank  for  more  than  three  years  almost  wholly  to  its  cashier,  who  had 
but  little  property,  and  of  whom  they  required  no  bond;  and  they 
knowingly  permitted  loans  to  be  made  to  individuals  and  firms  largely 
in  excess  of  the  amounts  allowed  by  law.  They  also  failed  to  record 
mortgages  given  to  secure  large  debts  due  the  bank,  even  after  they 
were  aware  of  its  insolvency,  and  erroneously  advised  an  examiner  who 
had  taken  charge  of  the  bank  that  it  was  not  necessary  to  record  them: 
Held,  That  they  were  personally  liable  for  the  losses  caused  by  such 
neglect  and  mismanagement,  and  the  frauds  and  defalcations  of  the 
cashier.  Directors  are  not  liable  for  concealing  from  creditors  the  fact 
of  the  bank's  embarrassment,  unless  that  embarrassment  is  such  as  to 
imperatively  demand  the  bank's  suspension.  {Id.)  But  perhaps  they 
might  be  liable  for  withdrawing  their  own  deposits  when  they  have 
knowledge  of  the  bank's  embarrassment.  {Id.)  A  National  bank  hav- 
ing suspended  payment  the  directors  issued  a  circular  stating  that  the 
bank  was  entirely  solvent,  and  invited  its  customers  to  make  deposits 
with  it,  to  be  held  as  special  deposits.  Afterwards  a  receiver  was  ap- 
pointed by  the  Comptroller  of  the  Currency,  and  the  special  deposits 
made  in  pursuance  of  such  invitation  were  turned  over  to  him:  Held^ 
That  the  directors  were  individually  liable  for  the  amount  of  such 
deposits.     (Miller  v.  Howard,  95  Tenn.,  407.) 

If  directors  who  are  depositors  and  know  some  time  before  suspension 
that  that  event  is  inevitable,  and  that  the  bank  can  pay  only  a  percent- 
age of  its  deposits,  and  yet  check  for  the  whole  of  their  own  balances, 
thereby  diminishing  the  percentage  to  which  the  other  creditors  would 
be  entitled,  they  defraud  to  this  extent  the  creditors  whose  interests 
they  were  relied  upon  to  protect,  and  will  be  held  to  strict  account- 
ability. (Robinson  v.  Hall,  63  Fed.  Rep.,  222.)  {Id.)  A  National  bank 
was  organized  with  a  capital  of  $60,000.  The  promoter  of  the  bank 
took  380  shares  of  stock  in  his  own  name  and  procured  the  defendants 
to  be  directors  as  well  as  a  person  to  be  elected  cashier  by  them.  The 
directors  were  not  acquainted  with  the  banking  business.  The  pro- 
posed cashier  was  known  to  the  directors,  at  least  by  reputation,  and 
was  supposed  by  them  to  be  competent  and  trustworthy  and  of  con- 
siderable experience  in  the  business,  and  they  had  full  confidence  in  his 
integrity  and  ability  to  take  charge  of  the  bank.  The  cashier  acted  as 
manager  of  the  loan  and  discount  business  of  the  bank,  and  the 
directors  merely  as  advisers,  when  applied  to.  The  promoter  of  the 
bank  knew,  and  the  other  stockholders  were  presumed  to  know,  that  the 
directors  were  wholly  unused  to  the  banking  business:  Held,  That  the 
directors  were  not  liable  for  the  acts  of  the  cashier  in  violation  of  the 


49 

banking  law  done  without  their  participation  or  knowledge.  (Clews  v. 
Barden,  36  Fed.  Rep.,  617.)  The  cashier  made  loans,  in  excess  of  10 
per  cent,  of  the  capital,  to  a  manufacturing  corporation  supposed  by 
him  and  by  the  public  to  be  entirely  solvent.  None  of  the  directors 
knew  of  the  loans  when  made,  but  after  a  loan  of  $3,000  in  excess  of  the 
lawful  limit  had  been  made  the  cashier  informed  one  of  them  of  such  a 
loan,  and  was  by  him  advised  to  call  it  in  when  due;  and  thereafter 
such  director's  advice  was  asked  as  to  a  further  discount  to  the  same 
corporation,  and  he  disapproved  of  it,  and  it  was  not  made.  After- 
wards further  loans  or  discounts  were  made  to  the  same  corporation 
without  the  knov/ledge  or  consent  of  any  of  the  directors.  About  eight 
months  after  the  bank  commenced  business  one  or  more  of  the  debtors 
of  the  bank  failed,  and  the  directors  thereupon  took  the  active  manage- 
ment into  their  own  hands:  Held,  That  none  of  the  directors  had 
knowingly  violated,  or  knowingly  permitted  to  be  violated,  any  of  the 
provisions  of  the  banking  law  and  were  not  liable  for  such  violation  by 
the  cashier.     (Id.) 

It  is  within  the  power  of  the  board  to  give  a  director  a  leave  of  ab- 
sence on  account  of  ill  health,  and  if  frauds  are  committed  during  his 
absence  and  without  his  knowleldge,  he  will  not  be  liable  for  them. 
(Briggs  V.  Spaulding,  141  U.  S.,  132.) 

There  have  been  comparatively  few  decisions  touching  the  duties  and 
liabilities  of  directors  of  National  banks;  but  their  duties  and  liabilities 
are,  in  general,  not  different  from  those  of  directors  of  other  corpora- 
tions. 

§  32.  Vacancies:  How  Filled. — Any  vacancy  in  the  board  shall 
be  filled  by  appointment  by  the  remaining  directors,  and  any  di- 
rector so  appointed  shall  hold  his  place  until  the  next  election. 
(Kev.  Stat.  U.  S.  Sec.  5148.) 

It  seems  to  be  the  proper  construction  of  this  section,  that  the  duty 
of  filling  any  vacancy  in  the  board  is  obligatory  on  the  remaining  di- 
rectors, and  is  not  merely  discretionary  with  them.  The  power  is  con- 
ferred upon  them  for  the  benefit  of  the  bank  and  its  stockholders,  and 
these  have  an  interest  in  having  the  power  exercised. 

§  33.  Proceedings  Where  No  Election  Held  at  Time  Appointed. 
— If,  from  any  cause,  an  election  of  directors  is  not  made  at  the 
time  appointed,  the  association  shall  not  for  that  cause  be  dis- 
solved, but  an  election  may  be  held  on  any  subsequent  day,  thirty 
days'  notice  thereof  in  all  cases  having  been  given  in  a  newspaper 
published  in  the  city,  town,  or  county  in  which  the  association  is 
located;  and  if  no  newspaper  is  published  in  such  city,  town,  or 


50 

county,  such  notice  shall  be  published  in  a  newspaper  published 
nearest  thereto.  If  the  articles  of  association  do  not  fix  the  day 
on  which  the  election  shall  be  held,  or  if  no  election  is  held  on 
the  day  fixed,  the  day  for  the  election  shall  be  designated  by  the 
board  of  directors  in  their  by-laws,  or  otherwise;  or  if  the  direc- 
tors fail  to  ^  the  day,  shareholders  representing  two-thirds  of 
the  shares  may  do  so.     (Eev.  Stat.  U.  S.  Sec.  5149.) 

Shareholders'  Control. — The  presence  of  this  section  in  the  law 
shows  the  importance  attached  by  the  legislators  to  the  exercise  of  con- 
trol over  the  management  of  the  bank  by  stockholders.  Precaution  is 
taken  that  the  annual  election  shall  not  be  neglected  by  the  directors 
who  might  perhaps  desire  to  hold  over.  If  the  election  is  from  any 
cause  omitted,  the  directors  have  the  power  to  cause  an  election  to  be 
held  on  a  subsequent  day  by  giving  notice  by  publication.  A  failure  to 
name  a  day  in  the  articles  of  association  may  be  remedied  by  the  di- 
rectors in  the  by-laws,  or  otherwise.  But  in  the  event  of  the  failure  of 
directors  to  fix  a  day,  either  when  no  day  has  been  fixed  in  the  articles 
of  association  or  by-laws,  or  when  election  has  not  been  held  on  the  day 
fixed,  two-thirds  of  the  stock  may  fix  a  day. 

When  No  Election  Held. — It  would  seem,  therefore,  that  unless  two- 
thirds  of  the  stock  were  dissatisfied  with  an  existing  board  of  directors, 
such  board,  by  neglecting  to  have  elections  held,  might  retain  office  for 
an  indefinite  period.  The  Comptroller  might,  perhaps,  require  them  to 
renew  their  oaths  each  year,  or  he  might  construe  the  law  to  be  man- 
datory as  to  annual  elections;  in  which  case  the  bank  would  have  to  be 
guided  by  the  Comptroller's  construction,  unless  it  wished  to  contest 
the  matter  in  the  courts  or  have  the  question  decided  by  some  law 
oflBcer  of  the  Government.  In  the  event  of  any  difference  of  opinion 
upon  a  legal  point  between  a  bank  and  the  Comptroller,  the  bank  can 
request  that  it  be  referred  to  the  Secretary  of  the  Treasury  or  the 
Attorney-General  of  the  United  States  for  an  opinion. 

If  a  shareholders*  meeting  is  held  by  mistake  on  the  wrong  day,  an- 
other meeting  must  be  called,  giving  the  regular  thirty-day  notice,  but 
if  all  shareholders  waive  notice  and  consent  to  date  fixed,  the  Comp- 
troller probably  will  not  object. 

§  34.  President  Must  Be  a  Director. — One  of  the  directors  to  be 
chosen  by  the  board  shall  be  the  president  of  the  board.  (Kev. 
Stat.  TJ.  S.  Sec.  5150.) 

Ex-Officio  Powers. — The  president  of  the  board  of  directors  Is  the 
presiding  officer  of  the  board,  but  otherwise  his  ex-offlcio  powers  are  not 


51 

sreater  than  those  of  any  other  director,  except  that,  as  the  head'  of  the 
board,  he  may  bring  suits  in  behalf  of  the  bank,  and  in  proceedings 
against  the  bank  legal  process  may  be  served  upon  him  when  it  might 
not  be  proper  to  serve  it  upon  any  other  director.  But  usually  he  is 
also  the  chief  executive  oflftcer  of  the  bank,  and  has  large  powers  dele- 
gated to  him  by  the  board. 

Vested  Powees. — It  is  important  to  remember,  however,  that  his 
authority  as  chief  managing  agent  of  the  bank  is  not  inherent  in  his 
office,  but  is  vested  in  him  by  the  board  of  directors,  either  expressly  or 
by  implication,  and  that  in  his  case,  as  well  as  in  that  of  any  other 
officer  or  agent,  it  is  necessary  to  show  that  the  requisite  authority  has 
been  conferred  by  the  board.  The  powers  of  the  president  will  ac- 
cordingly vary  in  different  cases,  and  the  powers  of  some  presidents  will 
be  much  greater  than  those  of  others.  The  directors  have  the  right  to 
remove  the  president  at  any  time.  (Taylor  v.  Hutton,  43  Barb.,  195.) 
And  they  have  this  power  though  the  bank  has  never  legally  adopted 
any  by-laws.  (Id.)  The  president  has  the  power  to  employ  counsel  and 
manage  the  litigation  of  a  bank,  in  the  absence  of  any  order  of  the 
board  of  directors  depriving  him  of  such  power.  (Citizens'  National 
Bank  of  Kingman  v.  Berry,  53  Kan.,  696.)  And  he  has,  by  virtue  of  his 
office,  authority  to  assign  a  judgment  owned  by  the  bank  (Guernsey  v. 
Black  Diamond  Coal  and  Mining  Company,  99  Iowa,  471) ;  or  to  com- 
promise or  release  a  debt  due  to  the  bank.  (Farmers'  National  Bank  v. 
Templeton,  40  S.  W.  Rep.,  412.)  He  has  no  power  inherent  in  his  office 
to  bind  the  bank  on  the  execution  of  a  note  in  its  name;  but  power 
to  do  so  may  be  conferred  on  him  by  the  board  of  directors,  either  ex- 
pressly by  resolution  to  that  effect,  or  by  subsequent  ratification,  or  by 
acquiescence  in  transactions  of  a  similar  nature  of  which  the  directors 
have  notice.  (National  Bank  of  Commerce  v.  Atkinson,  55  Fed.  Rep. 
465.)  But  it  is  within  the  scope  of  the  implied  power  of  the  president 
to  indorse  negotiable  paper  in  the  ordinary  transaction  of  the  bank's 
business,  and  a  special  authority  for  this  purpose  need  not  be  conferred 
by  the  board  of  directors.  (United  States  National  Bank  v.  First  Na- 
tional Bank  of  Little  Rock,  79  Fed.  Rep.,  296.)  Where  the  president 
exercises  the  functions  of  cashier  and  is  the  sole  managing  officer  of 
the  bank,  the  bank  will  be  bound  by  such  acts  of  his  as  belong  virtute 
officii  to  the  office  of  cashier.  (Simons  v.  Fisher,  55  Fed.  Ren.,  905.) 
Where  the  president  requests  the  cashier  to  make  advances  to  a  minor, 
verbally  promising  that  he  will  see  them  repaid,  he  is  liable  to  the 
bank  for  any  loss  sustained  by  reason  of  such  loans,  as  having  been 
guilty  of  a  breach  of  trust.  (Brown  v.  Farmers'  and  Merchants'  Na- 
tional Bank,  88  Tex.,  265.) 

§  35.  Individual     Liability     of     Shareholders. — The     share- 
holders of  every  National  banking  association  shall  be  held  in- 


62 

dividually  responsible,  equally  and  ratably,  and  not  one  for  an- 
other, for  all  contracts,  debts,  and  engagements  of  such  associa- 
tion, to  the  extent  of  the  amount  of  their  stock  therein,  at  the  par 
value  thereof,  in  addition  to  the  amount  invested  in  such  shares; 
except  that  shareholders  of  any  banking  association  now  existing 
under  State  laws,  having  not  less  than  five  millions  of  dollars  of 
capital  actually  paid  in,  and  a  surplus  of  twenty  per  centum  on 
hand,  both  to  be  determined  by  the  Comptroller  of  the  Currency, 
shall  be  liable  only  to  the  amount  invested  in  their  shares;  and 
such  surplus  of  twenty  per  centum  shall  be  kept  undiminished,  and 
be  in  addition  to  the  surplus  provided  for  in  this  Title ;  Eind  if  at  any 
time  there  is  a  deficiency  in  such  surplus  of  twenty  per  centum, 
such  association  shall  not  pay  any  dividends  to  its  shareholders 
until  the  deficiency  is  made  good;  and  in  case  of  such  deficiency, 
the  Comptroller  of  the  Currency  may  compel  the  association  to 
close  its  business  and  wind  up  its  affairs  under  the  provisions  of 
chapter  four  of  this  Title.     (Rev.  Stat.  TJ.  S.  Sec.  5151.) 

Fob  What  Liabilities  of  the  Bank  Shareholders  are  Responsible. 
— The  liability  is  not  contractional,  but  exists  by  force  of  the  statute. 
(First  National  Bank  of  Concord  v.  Hawkins,  33  U.  S.  App.,  747.)  But 
see  Deweese  v.  Smith',  106  Fed.  Rep.,  438.)  It  is  not  limited  in  anywise 
by  the  provision  in  Section  5234  that  the  receiver  may,  if  necessary  to 
pay  the  "  debts "  of  the  bank,  enforce  the  individual  liability  of  the 
stockholders;  but  the  word  *'  debts  "  in  the  latter  section  includes  all  the 
liabilities  of  the  bank  specified  in  this  section.  (Stanton  v.  Wilkeson,  8 
Benedict,  357.)  But  it  is  restricted  to  such  contracts,  debts,  and  engage- 
ments of  the  bank  as  have  been  duly  contracted  in  the  ordinary  course 
of  business.  (Richmond  v.  Irons,  121  U.  S.,  27;  Schrader  v.  Manu- 
facturers' National  Bank,  133  U.  S.,  67.)  The  liability  of  the  stockhold- 
ers, therefore,  cannot  be  enforced  to  pay  the  claims  of  creditors  on  new 
contracts  made  after  the  bank  has  been  placed  in  voluntary  liquidation. 
(Id.)  Thus,  where  a  bank  had  gone  into  liquidation  and  certain  credi- 
tors took  in  payment  of  their  claims  some  of  the  paper  of  the  bank,  and 
the  individual  notes  of  the  president  indorsed  or  guaranteed  in  the 
name  of  the  bank,  it  was  held  by  the  Supreme  Court  of  the  United 
States  that  the  stockholders  could  not  be  subjected  to  an  individual 
liability  for  the  payment  of  such  claims.    (Id.) 

Extent  of  the  Liability. — The  amount  which  each  shareholder  is 
liable  to  contribute  bears  the  same  proportion  to  the  whole  amount  of 
the  deficit  that  his  own  stock  bears  to  the  whole  amount  of  the  capital 
stock  at  its  par  value.    (United  States  v.  Knox,  102  U.  S.,  422.)    If  there 


53 

are  insolvent  shareholders,  the  solvent  shareholders  can  not  be  required 
to  contribute  more  than  their  proportion,  in  order  to  make  good  tlio 
deficiency.  (Id.)  The  liability  of  the  shareholder  is  for  interest  on 
the  debts  of  the  bank  as  well  as  for  the  principal  thereof.  (Richmond  v. 
Irons,  121  U.  S.,  27.)  The  assessment  itself  bears  interest  from  the  date 
of  the  order.     (Casey  v.  Galli,  94  U.  S.,  673.) 

Deceased  Stockholder. — This  liability  survives  against  the  represena- 
tives  of  a  deceased  shareholder,  and  adheres  to  his  estate  after  his 
death,  though  he  dies  before  the  insolvency  of  the  bank  occurs.  (Rich- 
mond V.  Irons,  121  U.  S.,  27;  Davis  v.  Weed,  44  Conn.,  569;  Wickham  v. 
Hull,  60  Fed.  Rep.,  326.)  And  the  fact  that  the  title  to  the  stock  of  a 
deceased  shareholder  vests  in  his  administrator  does  not  relieve  the 
estate  from  the  burden  of  an  assessment.  (Davis  v.  Weed,  44  Conn., 
supra.)  Nor  will  the  fact  that  the  administration  is  complete,  and  all 
the  assets  have  been  distributed,  defeat  an  action  brought  to  recover  the 
assessment.     (Id.) 

Married  WoMEN.—When  the  law  of  the  State  where  the  contract  is 
made  permits  married  women  to  become  owners  of  stock,  they  will  be 
subject  to  all  the  liabilities  of  stockholders.  (Bundy  v.  Cocke,  128  U. 
S.,  185;  Keyser  v.  Hitz,  133  U.  S.,  438;  In  Re  National  Bank  of  St.  Al- 
bans, 49  Fed.  Rep.,  120;  Anderson  v.  Line,  14  Fed.  Rep.,  405.)  And  it 
has  been  held  that  where  a  married  woman  is  by  the  State  law  capable 
of  holding  stock  in  a  National  bank  in  her  own  right,  she  is  liable 
thereon  under  this  section,  though  the  law  of  the  State  does  not  au- 
thorize married  women  to  bind  themselves  by  contracts  for  the  pay- 
ment of  money;  for  the  law  annexes  her  liability  of  its  own  force,  and 
no  capacity  to  act  on  her  part  is  required.  (Witters  v.  Sowles,  35  Fed. 
Rep.,  640.) 

The  purchase  of  National  bank  stock  by  a  married  woman  is  not  a 
"contract"  within  the  terms  of  a  statute  providing  that  during  con- 
verture  no  woman  shall  be  capable  of  making  any  contract  to  affect  her 
real  and  personal  estate  without  the  consent  of  her  husband;  and  she 
will  be  liable  for  an  assessment,  although  th«  stock  was  purchased  with- 
out the  written  consent  of  her  husband.  (Robinson  v.  Turrentine,  59 
Fed.  Rep.,  554.)  In  Vermont  a  married  woman  is  competent  to  become 
a  stockholder  in  a  National  bank,  and  to  contract  to  charge  her  separate 
property  with  the  payment  of  any  liability  which  is  implied  from  enter- 
ing  into  that  relation.  (Witters  v.  Sowles,  38  Fed.  Rep.,  700.)  And  in 
the  District  of  Columbia,  a  married  woman  may  become  a  holder  of 
stock  in  a  National  bank  and  assume  all  the  liabilities  of  such  a  share- 
holder, although  the  consideration  may  have  proceeded  wholly  from  the 
husband.    (Keyser  v.  Hitz,  133  U.  S.,  438.) 


54 

Assignment  for  Ceeditoes — Defrauding  Creditors. — In  a  suit  to  en- 
force the  individual  liability  of  a  stockholder,  it  is  not  material  that 
the  person  who  transferred  the  stock  to  such  stockholder  did  so  for  the 
purpose  of  concealing  his  property  and  defrauding  his  creditors;  there 
is  no  connection  between  the  liability  of  the  stockholder  and  an  alleged 
fraudulent  intent  on  the  part  of  the  person  from  whom  the  title  to  the 
stock  was  acquired.  (Keyser  v.  Hitz,  133  U.  S.,  433.)  And  conversely 
the  fact  that  one  is  a  stockholder  and  director  in  an  insolvent  National 
bank,  and  individually  liable  for  the  debts  of  the  bank  to  the  amount 
of  his  stock,  will  not  operate  so  as  to  prevent  him  from  making  an 
otherwise  lawful  disposition  of  his  property  for  the  benefit  of  his  credi- 
tors. ( Peters  v.  Bain,  133  U.  S.,  670. )  Where  a  stockholder  in  a  National 
bank  makes  a  general  assignment  after  the  bank  has  become  insolvent, 
his  estate  in  the  hands  of  the  assignee  becomes  liable  for  an  assessment 
upon  such  stock,    (Graham  v.  Piatt,  28  Colorado,  421.) 

Registered  Owner  Liable — What  a  Sufficient  Transfer. — As  a 
general  rule,  the  Comptroller  of  the  Currency  and  the  Receiver,  when 
they  come  to  enforce  the  individual  liability  of  the  stockholders,  are 
not  required  to  look  beyond  the  stock-books,  but  may  hold  all  persons 
liable  as  stockholders  who  appear  on  the  books  as  such.  In  order  to 
relieve  himself  from  liability  every  stockholder  selling  his  stock  must 
have  the  transfer  properly  registered;  for  while,  as  between  the  parties, 
the  sale  is  complete  and  the  title  passes  when  the  seller  delivers  to  the 
buyer  the  certificates  with  a  proper  power  of  attorney  to  make  the 
transfer,  the  corporation  and  its  creditors  are  not  affected  by  the  trans- 
action until  it  is  noted  on  the  books,  or  until,  at  least,  the  seller  shall 
have  done  all  that  he  reasonably  can  do  to  have  it  so  noted.  Accord- 
ingly, where  a  stockholder  sold  certain  stock  several  months  before  the 
insolvency  of  the  bank,  but  the  transfer  was  not  made  on  the  books 
till  the  date  of  the  bank's  failure,  it  was  held  that  the  stockholder 
incurred  the  statutory  liability.  (Richmond  v.  Irons,  121  U.  S.,  27.) 
But  the  seller,  when  he  has  delivered  the  certificates  with  a  suitable 
power  of  attorney  to  the  proper  officer  of  the  bank,  and  requested  him 
to  make  the  transfer  on  the  books,  will  not  be  responsible  for  the 
failure  of  such  officer  to  actually  make  the  entry  if  he  has  had  no  reason 
to  suppose  that  this  was  not  done  as  directed.  (Whitney  v.  Butler,  118 
U.  S.,  655;  Earl  v.  Carson,  188  U.  S.,  42;  Cox  v.  Elmendorf,  97  Tenn., 
518.)  *'  The  position  of  the  seller  in  such  case  is  analogous  to  that  of  a 
grantor  of  a  deed  deposited  in  the  proper  oflfice  to  be  recorded.  The 
general  rule  is,  that  the  deed  is  considered  as  recorded  from  the  time  of 
such  deposit."  Therefore,  where  a  shareholder  of  a  National  bank  made 
a  'bona-fide  sale  of  his  stock  and  went  with  the  purchaser  to  the  bank, 
indorsed  the  certificate,  and  delivered  it  to  the  cashier  of  the  bank,  with 
directions  to  make  the  transfer  on  the  books,  it  was  held  he  had  done 
all  that  is  incumbent  upon  him  to  discharge  his  liability,  and  that  he 


8S 

was  not  liable  upon  the  subsequent  suspension  of  the  bank  for  an 
assessment  made  by  the  Comptroller  of  the  Currency,  though  the  cashier 
failed  to  make  the  transfer.  (Hayes  v.  Shoemaker,  39  Fed.  Rep.,  319.) 
So,  where  a  stockholder,  nearly  a  year  before  the  failure,  had  sold  his 
stock  to  a  broker  for  an  undisclosed  principal,  and  indorsed  the  same, 
and  requested  the  broker  to  inform  the  cashier  of  the  transaction,  and 
to  have  the  stock  transferred;  and  the  broker  accordingly  handed  the 
stock  to  the  cashier,  gave  him  the  necessary  information,  and  requested 
him  to  make  the  transfer,  which  the  cashier  promised  to  do;  it  was  held 
that  in  requesting  the  cashier  to  make  the  transfer  the  broker  acted  as 
the  seller's  agent,  and  that  the  latter  did  all  that  was  required  of  him 
as  a  prudent  business  man,  and  could  not  be  held  liable  as  a  stockholder, 
though  the  transfer  was  not  in  fact  made.  (Young  v.  McKay,  50  Fed. 
Rep.,  594.)  But  where  the  seller  delivers  the  stock  certificate  and  power 
of  attorney  to  the  buyer  relying  upon  the  promise  of  the  latter  to  have 
the  necessary  transfer  made,  this  will  not  be  sufiiient  to  discharge  him. 
Thus,  where  T,  who  owned  certain  shares  of  stock  in  a  National  bank, 
sold  them  to  his  son,  and  the  latter  promised  to  have  them  transferred 
on  the  books  to  himself,  but  failed  to  do  so,  it  was  held,  that  T  remained 
liable  as  a  stockholder.  (Schofield  v.  Twining,  127  Fed.  Rep.,  486.) 
And  where  the  sale  is  made  to  an  officer  of  the  bank,  and  the  certificates 
and  power  of  attorney  are  delivered  to  him  and  not  as  such  officer,  but 
as  vendee,  the  seller  will  continue  liable  until  the  entry  is  made.  (Rich- 
mond V.  Irons,  121  U.  S.,  27.)  Of  course,  a  person  whose  name  is  put 
upon  the  stock-books  without  his  knowledge  or  consent  can  not  be  held 
liable  as  a  stockholder;  but  it  has  been  decided  that  where  the  person 
to  whom  the  stock  was  transferred  was  a  director  of  the  bank,  and  was 
concerned  in  the  management  of  its  affairs,  he  was  to  be  presumed  to 
have  knowledge  of  the  fact  that  the  stock  stood  in  his  name,  and,  as  he 
had  not  repudiated  the  transfer  to  himself,  he  was  liable  as  the  holder 
of  such  stock.  (Brown  v.  Finn,  142  U.  S.,  56.)  And  where  one  endorses 
a  check  payable  to  his  order,  which  discloses  upon  its  face  that  it  is  for 
dividends  on  stock  standing  in  his  name  on  the  books  of  the  bank,  he  is 
estopped  to  deny  that  he  is  the  owner  of  the  stock  upon  which  the  divi- 
dends are  declared.  (Keyser  v.  Hitz,  133  U.  S.,  433.)  If  he  denies  own- 
ing the  stock,  he  should  restore  the  dividend  to  the  bank.  (Finn  v. 
Brown,  142  U.  S.,  56.)  And  if  the  dividend  turns  out  to  be  a  fraudulent 
one,  he  will  not  have  freed  himself  from  liability  for  it  by  giving  his 
check  for  it  on  the  bank  to  the  alleged  true  owner.  (Id.)  Where  cer- 
tificates are  issued  to  a  subsequent  purchaser  in  lieu  of  the  certificates 
of  the  prior  owner,  such  purchaser  will  be  liable  as  a  stockholder  though 
the  by-laws  of  the  bank  requiring  the  transfer  to  be  registered  were  not 
observed.  (Laing  v.  Burley,  101  111.,  591.)  Where  certificates  of  stock 
are  made  out  to  the  holder  as  the  absolute  owner  thereof,  and  he  so 
appears  on  the  books  of  the  bank,  he  will  not  be  permitted  to  show  in  an 
action  against  him  to  recover  an  assessment  on  the  stock  that  he  held 
the  same  as  trustee.     (Lewis  v.  Levitz,  74  Fed.  Rep.,  381.) 


56 

In  the  case  of  an  agreement  made  with  a  subscriber  to  the  stock  of 
a  National  bank  to  take  the  stock  from  him  at  a  certain  time,  at  his 
option,  the  person  so  agreeing  to  purchase  the  stock  will  be  liable  to 
the  other  for  the  amount  of  an  assessment  made  by  the  Comptroller  of 
the  Currency  upon  the  stock  after  the  tender  thereof  in  pursuance  of 
the  contract.  (Gay  v.  Dare,  103  Cal.,  454.)  While  one  who  voluntarily 
appears  upon  the  books  of  a  National  bank  as  a  stockholder  will  be  pre- 
cluded from  showing  that  he  is  not  in  fact  a  stockholder,  yet,  where  it  is 
admitted  that  the  stock  is  owned  by  another,  and  judgment  obtained 
against  him  for  the  amount  of  the  assessment  upon  such  stock,  the 
person  in  whose  name  it  stands  cannot  be  held  liable  thereon.  (Yardly 
V.  Wilgus,  56  Fed.  Rep.,  965.) 

SuBSCBiBERs  TO  New  Stock. — ^A  Stockholder  who  elects  to  subscribe 
for  shares  of  an  increase  and  actually  pays  for  the  same,  and  is  regis- 
tered as  holding  the  additional  shares  on  the  books  of  the  bank,  thereby 
becomes  a  shareholder,  and  his  failure  to  call  for  his  certificate  of  stock 
makes  no  difference  in  his  liability  as  such.  (Thayer  v.  Butler.  141  U. 
S.,  234.)  But  the  fact  that  the  subscriber  for  new  shares  (which  were 
never  issued)  received  a  dividend  on  old  shares  transferred  to  him 
without  his  knowledge  in  place  of  new  shares,  does  not  estop  him  from 
denying  his  liability  as  a  shareholder,  where  such  dividend  was  received 
in  the  belief  that  it  was  paid  to  him  by  virtue  of  his  subscription  to  the 
new  stock.  (Stephens  v.  Follett,  43  Fed.  Rep.,  842.)  And  one  who  sub- 
scribes and  pays  for  a  specific  number  of  shares  of  a  proposed  increase 
of  stock,  which  is  in  fact  never  issued,  and  to  whom  the  bank  officials 
transfer  old  stock  instead,  without  his  knowledge  and  consent,  is  not  to 
be  deemed  a  shareholder  as  to  the  stock  so  issued  to  him.  (Stephens  v. 
Follett,  43  Fed.  Rep.,  842.)  But  the  subscribers  may  be  estopped 
to  dispute  the  legality  of  increase  by  accepting  certificates  for  the 
stock,  receiving  dividends,  and  giving  proxies  to  vote  upon  the  stock. 
(Tillinghast  v.  Bailey,  86  Fed.  Rep.,  46;  Latimer  v.  Burd,  76  Fed.  Rep., 
536.)  And  the  certificate  of  the  Comptroller  of  the  Currency  authoriz- 
ing the  increase  of  the  capital  stock  of  a  National  bank  is  conclusive 
upon  the  subscribers  to  such  new  stock  when  sued  for  an  assessment 
laid  upon  the  same.     (Id.) 

In  McFarlin  v.  First  National  Bank  (68  Fed.  Rep.,  868),  the  plaintiffs 
subscribed  for  certain  shares  in  a  bank  to  increase  the  capital,  and, 
after  paying  installments  thereon,  consented  that  the  bank  be  consoli- 
dated with  a  National  bank,  and  that  the  capital  of  the  latter  be  in- 
creased, and  that  their  subscriptions  should  stand  as  subscriptions  to 
the  increased  capital  of  the  National  bank  and  paid  installments  on 
their  subscriptions.  Some  preliminary  steps  were  taken  by  the  Na- 
tional bank  to  increase  its  stock,  but  the  Comptroller  of  the  Currency 
refused  to  consent  to  the  full  increase,  and  before  the  amount  of  increase 
allowed  by  him  was  paid  in,  and  a  certificate  therefor  issued  by  him. 


5? 

the  National  bank  was  placed  in  the  hands  of  a  receiver:  Retd,  That 
plaintiffs  never  became  stockholders  in  the  National  bank. 

Liability  of  Pledgee. — A  person  who  holds  stock  merely  as  collateral 
security  is  liable  as  the  owner  of  the  stock,  if  he  appears  upon  the  books 
of  the  bank  as  such.  (National  Bank  v.  Case,  99  U.  S.,  Q2S;  Moore  v. 
Jones,  3  Woods,  53;  Hale  u  Walker,  31  Iowa,  344;  Wheelock  v.  Kost,  77 
III.,  296;  but  see  Magruder  v.  Colston,  44  Md.,  349.)  "For  this  several 
reasons  are  given.  One  is  that  he  is  estopped  from  denying  his  liability  by 
voluntarily  holding  himself  out  to  the  public  as  the  owner  of  the  stock, 
and  his  denial  of  ownership  is  inconsistent  with  the  representations  he 
has  made;  another  is,  that  by  taking  the  legal  title  he  has  released  the 
former  owner;  and  a  third  is,  that  after  having  taken  the  apparent 
ownership  and  thus  become  entitled  to  receive  dividends,  vote  at  elec- 
tions and  enjoy  all  the  privileges  of  ownership,  it  would  be  inequitable 
to  allow  him  to  refuse  the  responsibilities  of  a  stockholder."  And  so 
long  as  the  stock  continues  to  stand  in  his  name  the  pledgee  will  be 
liable  as  a  stockholder,  though  the  loan  has  been  repaid,  and  the  stock 
certificate  surrendered,  with  an  executed  power  of  attorney  to  make  the 
transfer.  (Bowdell  v.  Farmers'  and  Merchants'  National  Bank,  14 
Bankers'  Magazine,  378;  2  Nat.  Bk.  Cases,  146.)  But  a  pledgee,  acting 
in  good  faith,  and  without  any  fraudulent  intention,  has  the  perfect 
right  to  shun  such  liability,  and  may  have  the  control  of  the  stock  for 
the  purposes  of  security  without  being  made  liable  as  a  registered  share- 
holder. (Anderson  v.  Philadelphia  Warehouse  Company,  111  U.  S.,  479.) 
In  the  case  cited,  the  pledgee,  the  Philadelphia  Warehouse  Company, 
with  the  knowledge  and  consent  of  the  pledgor  and  the  officers  of  the 
bank,  had  had  the  stock  transferred  on  the  books  of  the  bank  to  an 
irresponsible  person,  one  of  its  employees,  from  whom  it  took  an  irrevo- 
cable power  of  attorney  for  the  sale  and  transfer  of  the  stock.  The  divi- 
dends were  paid  regularly  to  the  pledgor,  and  the  pledgee  never  re- 
ceived any  dividends,  and  never  acted  as  a  shareholder.  At  the  time  of 
the  transfer  the  bank  was  entirely  solvent,  but  afterwards  it  failed. 
Upon  these  facts  it  was  decided  that  the  pledgee  was  not  liable  for  an 
assessment  made  upon  the  shareholders  of  the  bank.  It  may  be  said, 
therefore,  upon  the  authority  of  this  case,  that  where  a  National  bank  is 
solvent,  a  person  taking  its  shares  as  collateral  security,  when  acting  in 
good  faith,  may  avoid  incurring  a  liability  in  respect  to  such  shares  by 
having  them  transferred  on  the  books  of  the  bank,  and  certificates  there- 
for issued  to  some  third  person,  from  whom  a  power  of  attorney  to 
transfer  the  stock  can  be  taken.  But  in  such  case  the  officers  of  the 
bank  should  be  fully  advised  of  the  character  of  the  transaction,  and 
the  pledgee  should  receive  no  dividends  on  the  stock  or  exercise  any  of 
the  rights  of  a  shareholder,  and  should  not  pretend  to  be,  or  permit 
himself  to  be  held  out  as,  anything  more  than  a  mere  pledgee.  In  Beall 
V.  Essex  Savings  Bank  (07  Fed.  Rep.,  816),  it  was  held  by  the  United 


58 

States  Circuit  Court  of  Appeals,  that  where  the  stock  is  transferred  as 
collateral  security,  and  the  fact  that  it  is  held  only  as  such  security 
appears  upon  the  transfer  book  of  the  bank,  the  person  by  whom 
it  is  so  held  will  not  be  liable  to  an  assessment  upon  the  stock  in  case  of 
the  failure  of  the  bank.  And,  in  Pauly  v.  State  Loan  and  Trust  Com- 
pany (165  U.  S.,  606),  it  was  held  by  the  Supreme  Court  of  the  United 
States  that  one  to  whom  stock  of  a  National  bank  is  transferred  upon 
the  books  of  the  bank  "  as  pledgee  "  is  not  liable  as  a  stockholder.  The 
Court  said: 

"  It  is  true  that  one  wno  does  not  in  fact  invest  his  moneys  in  such 
shares,  but  who,  although  receiving  them  simply  as  collateral  security 
for  debts  or  obligations,  holds  himself  out  on  the  books  of  the  associa- 
tion as  true  owner,  may  be  treated  as  the  owner,  and,  therefore,  liable 
to  assessment,  when  the  association  becomes  insolvent  and  goes  into  the 
hands  of  a  receiver.  But  this  is  upon  the  ground  that  by  allowing  his 
name  to  appear  upon  the  stock  list  as  owner  he  represents  that  he  is 
such  owner;  and  he  will  not  be  permitted,  after  the  bank  fails,  and 
when  an  assessment  is  made,  to  assume  any  other  position  as  against 
creditors.  If,  as  between  creditors  and  the  person  assessed,  the  latter 
is  not  held  bound  by  that  representation,  the  list  of  shareholders  re- 
quired to  be  kept  for  the  inspection  of  creditors  and  others  would  lose 
most  of  its  value.  But  this  rule  can  have  no  just  application  when,  as 
in  this  case,  the  creditors  were  informed  by  that  list  that  the  party  to 
whom  certificates  were  issued  was  not  in  fact,  and  did  not  assume  to  be, 
the  owner  of  the  shares  represented  by  them,  but  was  and  assumed  to  be 
only  a  pledgee  having  no  general  property  in  the  thing  pledged,  but  only 
a  right,  upon  default,  to  sell  in  satisfaction  of  the  pledgor's  obligation. 
Upon  inspecting  the  stock  registry,  or,  any  list  of  shareholders  or  of 
transfers  kept  by  the  bank,  creditors  will  know  that  they  cannot  regard 
a  pledgee  as  the  actual  owner." 

And,  of  course,  a  pledgee  who  does  not  appear  by  the  books  of  the 
bank  or  otherwise  to  be  the  owner  is  not  liable  for  an  assessment  upon 
the  shares  on  the  insolvency  of  the  bank.  (Welles  v.  Larrabee  et  al., 
36  Fed.  Rep.,  866.)  And  though  he  buys  in  the  stock  at  the  sale  and 
credits  the  amount  of  the  purchase  price  on  the  indebtedness  to  which 
it  is  collateral,  and  retains  the  certificates,  yet  he  will  not  be  liable 
for  an  assessment  upon  the  stock  in  case  of  the  bank's  insolvency,  un- 
less he  has  the  stock  transferred  to  himself  upon  the  books  of  the  bank. 
(Robinson  v.  Southern  National  Bank,  94  Fed.  Rep.,  964.)  If  the  holder 
in  fact  holds  the  stock  merely  as  collateral  security,  he  may  list  the 
shares  in  his  own  name  as  pledgee,  or  in  the  name  of  another  and  irre- 
sponsible party,  even  though  this  be  done  for  the  purpose  of  avoiding 
liability.  (Rankin  v.  Fidelity  Insurance,  etc.,  189  U.  S.,  242.)  Thus, 
it  has  been  held  that  if  a  person  receives  shares  of  the  stock  of  a  Na- 
tional bank  as  collateral  security  for  a  debt  due  to  him  from  the  owner, 
with  a  power  of  attorney  authorizing  him  to  transfer  the  same  on  the 


59 

books  of  the  bank,  and  he  in  good  faith  causes  the  shares  to  he  trans- 
ferred on  such  books  to  another,  under  an  agreement  that  they  are  to 
be  held  as  security  for  the  debt  due  from  the  real  owner  to  the  creditor, 
he  will  not  be  treated  as  a  shareholder.  (Nat.  Park  Bank  of  the  City  of 
New  York  v.  Harmon,  25  C.  C.  A.,  214  Fed.  Rep.,  891;  Higgins  v.  Fidelity 
Insurance,  Trust  and  Safe  Deposit  Co.,  108  Fed.  Rep.,  475.)  Where 
there  is  a  question  of  fact  whether  the  holder  held  himself  out  as  owner 
of  the  stock,  it  is  to  be  submitted  to  the  jury.  Rankin  v.  Fidelity 
Ins.,  etc.,  Co.,  189  U.  S.,  242.)  When  it  is  proved  or  admitted  that 
the  person  in  whose  name  the  stock  stands  is  a  mere  pledgee,  then 
the  burden  is  upon  the  Receiver  attempting  to  enforce  an  assessment 
upon  such  stock  against  such  person  to  show  that  he  knowingly  per- 
mitted the  stock  to  stand  in  his  name  on  the  books  of  the  bank.  (Tour- 
telot  V.  Stoltenben,  101  Fed.  Rep.,  362.) 

Transfer  for  the  Purpose  of  Avoiding  Liability. — The  right  of 
creditors  of  a  National  bank  to  look  to  the  individual  liability  of  the 
shareholders,  to  the  extent  indicated  by  the  statute,  for  its  contracts, 
debts  and  engagements,  attaches  when  the  bank  becomes  insolvent; 
and  the  shareholder  may  not,  by  transferring  his  stock,  compel  credit- 
ors to  surrender  this  security  as  to  him,  and  force  the  receiver  and 
creditors  to  look  to  a  person  to  whom  his  stock  has  been  transferred. 
( Stuart  V.  Hayden,  169  U.  S.,  1. )  The  real  owner  of  the  stock  cannot  escape 
liability  by  having  it  transferred  on  the  books  into  the  name  of  another 
person.  (Davis  v.  Stevens,  17  Blatchford,  259;  National  Bank  v.  Case, 
99  U.  S.,  628;  Stuart  v.  Hayden,  169  U.  S.,  1.)  And  where,  for  the 
purpose  of  avoiding  liability,  a  shareholder  in  a  bank  which  is  in  a 
failing  condition,  transfers  his  stock  to  a  person  unable  to  respond 
to  the  assessment,  the  transfer  may  be  set  aside  as  a  fraud  upon  the 
creditors,  and  the  transferror  held  liable  as  a  stockholder.  (Bowden  v. 
Johnson,  107  U.  S.,  251.)  And  after  a  bank  has  become  insolvent,  and 
has  closed  its  doors  for  business,  its  shareholders'  liablity  to  creditors 
is  so  fixed  that  any  transfer  of  their  shares  must  be  held  fraudulent 
and  inoperative  as  against  the  creditors  of  the  bank.  (Irons  v.  Manu- 
facturers' National  Bank,  17  Fed.  Rep.,  308.)  Moreover,  if  the  stock- 
holder has  reason  to  apprehend  that  the  bank  is  in  a  failing  condition, 
he  cannot  escape  liability  by  transferring  the  stock  to  a  person  finan- 
cially irresponsible.  (Baker  v.  Reeves,  85  Fed.  Rep.,  837.)  And  this  is 
so,  even  when  he  acts  in  good  faith.  (Stuart  v.  Hayden,  169  U.  S.,  1.) 
On  the  other  hand,  if  the  bank  be  solvent  at  the  time  of  the  transfer, 
that  is,  able  to  meet  its  existing  contracts,  debts  and  engagements,  the 
motive  with  which  the  transfer  is  made  is  immaterial,  as  a  transfer 
under  such  circumstances  does  not  impair  the  security  given  to  the 
creditors.  (Id.)  In  order  that  the  transferror  may  be  held  liable  it  is 
not  necessary  that  he  should  have  had  actual  knowledge  of  the  insol- 
vency of  the  bank;  it  is  sufficient  if  he  had  good  ground  to  apprehend 


1 


60 

the  failure  of  the  bank,  and  made  the  transfer  to  an  irresponsible  per- 
son, with  intent  to  relieve  himself  from  individual  liability.  (Cox  v, 
Montague,  78  Fed.  Rep.,  845.)  But  though  both  the  bank  and  the  pur- 
chaser were  insolvent  at  the  time  of  the  sale,  the  seller  will  not  be 
liable  as  a  stockholder  if  he  was  ignorant  of  these  facts  and  acted  in 
good  faith.  (Earle  v.  Carson,  107  Fed.  Rep.,  639.)  Nor  is  the  trans- 
ferror liable  merely  because  at  the  time  of  the  transfer  the  reserve  of 
the  bank  was  below  the  amount  required  by  law,  and  such  fact  was 
known  to  him.  (Earle  v.  Carson,  188  U.  S.,  42.)  Nor  merely  because  the 
person  to  whom  the  stock  Is  sold  is  at  the  time  insolvent,  and  unable  to 
respond  to  an  assessment,  and  such  fact  is  known  to  him.  (Id.)  Where 
stock  has  been  fraudulently  transferred  for  the  purpose  of  avoiding  lia- 
bility both  the  transferror  and  the  transferee  are  liable  for  the  assess- 
ment. (Baker  v.  Reeves,  85  Fed.  Rep.,  837.)  But  in  an  action 
brought  by  the  receiver  the  transferee  of  the  stock  cannot  by  cross- 
bill obtain  relief  against  the  transferror  for  having  defrauded  him 
in  the  sale  of  the  stock.  (Stuart  v.  Hayden,  169  U.  S.,  1.)  The  receiver 
is  the  proper  party  to  maintain  a  suit  in  behalf  of  the  creditors  of  the 
bank  to  set  aside  a  transfer  of  stock  made  by  a  stockholder  for  the  pur- 
pose of  escaping  liability  as  such  stockholder.    (Id.)  , 

Purchase  in  Name  of  Infant. — One  who  buys  stock  of  a  National 
bank  in  the  name  of  an  infant  will  be  liable  for  an  assessment,  since 
the  infant  is  incapable  of  binding  himself  as  a  stockholder.  (Foster  v. 
Chase,  75  Fed.  Rep.,  797.)  And  the  ratification  by  the  infant  of  such 
purchase  after  he  becomes  of  age  will  not  affect  such  liability.  (Foster 
V.  Wilson,  75  Fed.  Rep.,  797.) 

Liability  is  for  Benefit  of  all  Creditors. — ^The  liability  of  the 
stockholders  can  be  enforced  only  in  favor  of  all  the  creditors.  If,  there- 
fore, a  stockholder  gives  any  security  for  his  liability,  it  must  be  for  the 
benefit  of  all  the  creditors  alike.  Where  a  stockholder,  after  the  failure 
of  a  bank,  gave  a  mortgage  for  the  purpose  of  securing  a  single  de- 
positor, such  mortgage  was  held  void  as  against  a  judgment  obtained 
in  an  action  against  such  stockholder  to  enforce  his  individual  liability. 
(Catch  V.  Fitch,  34  Fed.  Rep.,  566.) 

Rescinding  Purchase — Fraud  of  Bank. — A  stockholder  who  has  been 
induced  by  fraudulent  representations  to  subscribe  for  stock  in  a  Na- 
tional bank  will  not  necessarily  be  precluded  from  repudiating  such  sub- 
scription by  reason  of  the  insolvency  of  the  bank,  if  he  has  exercised 
due  diligence  in  discovering  the  fraud,  and  has  acted  promptly  after 
such  discovery.  (Newton  National  Bank  v.  Newbegin,  74  Fed.  Rep., 
135.)  An  intending  purchaser  of  bank  stock  is  entitled  to  rely  upon  a 
statement  of  its  president  as  to  the  bank's  condition,  without  inquiring 
further.     (Merrill  v.  Florida  Land  &  Improvement  Qo„  ^0  Fe^.  Rep., 


61 

17.)  The  receipt  by  a  bank  of  the  proceeds  of  a  fraudulent  sale  of  stock 
belonging  to  it,  and  the  subsequent  appointment  of  a  receiver,  gives  its 
creditors  no  such  right  in  the  proceeds  as  will  prevent  the  purchasers 
from  rescinding  the  sale  and  requiring  restitution.    (Id.) 

Estoppel.— A  shareholder  against  whom  suit  is  brought  to  recover  the 
assessment  made  upon  him  by  the  Comptroller  will  not  be  permitted 
to  deny  the  existence  of  the  association,  or  that  it  was  legally  incor- 
porated.    (Casey  v.  Galli,  94  U.  S.,  673;  Wheelock  v.  Kost,  77  111.,  296.) 

Rules  Applicable.— While  the  liability  of  stockholders  in  National 
banks  is  to  be  rigorously  enforced,  the  courts  will  not  treat  them  with 
exceptional  severity,  and  apply  to  their  transfers  different  rules  from 
those  which  obtain  in  other  business  transactions.  (Hayes  v.  Shoe- 
maker, 39  Fed.  Rep.,  319.) 

Pbocedure. — The  creditors  of  an  insolvent  National  bank  must  seek 
their  remedy  through  the  Comptroller,  in  the  mode  prescribed  by  the 
statute;  they  can  not  proceed  directly  in  their  own  names  against  stock- 
holders. (Kennedy  v.  Gibson,  8  Wall,  498.)  It  is  the  duty  of  the  Comp- 
troller of  the  Currency  to  decide  when  proceedings  are  necessary  against 
the  stockholders  of  a  National  bank  to  enforce  their  personal  liability, 
and  to  what  extent  such  liability  shall  be  enforced;  and  in  an  action  by  a 
receiver  to  enforce  such  liability,  such  prior  determination  of  the 
Comptroller  must  be  distinctly  averred  and  proved.  (Kennedy  v.  Gib- 
son, 8  Wall,  498.)  But  it  is  not  essential  to  aver  and  prove  that  the 
assessment  was  necessary,  for  the  decision  of  the  Comptroller  on  this 
point  is  conclusive.  (Strong  v.  Southworth,  8  Ben.,  331;  Kennedy  v. 
Gibson,  8  Wall,  498;  Casey  v.  Galli,  94  U.  S.,  673.)  Nor  is  it  necessary 
to  allege  that  the  Comptroller  had  determined  that  the  assessment 
was  necessary;  it  is  sufficient  to  allege  that  he  made  the  assessment. 
(O'Connor  v.  Witherby,  111  Cal.,  523.)  The  decision  of  the  Comptroller 
Is  conclusive,  and  cannot  be  attached  collaterally.  (Deweese  v.  Smith, 
106  Fed.  Rep.,  438;  Aldrich  v.  Campbell,  97  Fed.  Rep.,  663.) 

FoEM  OF  Action. — When  the  full  personal  liability  of  shareholders  is 
to  be  enforced  the  action  must  be  at  law.  (Kennedy  v.  Gibson,  8  Wall, 
498;  Casey  v.  Galli,  94  U.  S.,  673.)  And  it  may  be  at  law,  though  the 
assessment  is  not  for  the  full  value  of  the  shares;  for^  since  the  sum 
each  shareholder  must  contribute  is  a  certain  exact  sum,  there  is  no 
necessity  for  invoking  the  aid  of  a  court  of  equity.  (Bailey  v.  Sawyer, 
4  Dill.,  463;  1  N.  B.  C,  356.)  But  the  suit  may  be  in  equity.  (Kennedy 
V.  Gibson,  8  Wall.,  498.)  And  where  questions  are  involved  which  are 
common  to  a  number  of  stockholders  they  may  be  joined  as  defendants. 
(Bailey  v.  Tillinghast,  99  Fed.  Rep.,  801.)  And  it  is  no  objection  to  tho 
bill  that  other  stockholders,  opt  within  the  ^urisdictjon  ot  the  court,  are 
not  co-defendants.    (Id.) 


62 

When  Right  of  Action  Accrues — Statute  of  Limitations, — ^A  right 
of  action  against  a  stockholder  does  not  accrue  until  the  Comptroller 
has  determined  that  it  is  necessary  to  enforce  the  individual  liability; 
but  where  there  is  great  and  unexplained  delay  in  making  such  assess- 
ment the  action  may  be  barred  by  the  statute  of  limitations  though  the 
action  is  brought  shortly  after  the  making  of  the  assessment.  (Aldrich 
V.  Yates,  95  Fed.  Rep.,  78;  Price  v.  Yates,  19  Alb.  Law  Journal,  295;  2 
N.  B.  Cas.,  204.)  The  State  statutes  of  limitations  apply  to  actions  to 
enforce  assessments.  (Butler  v.  iPoole,  44  Fed.  Rep.,  586;  Thompson  v. 
German  Insurance  Company,  76  Fed.  Rep.,  892.)  The  statute  begins  to 
run  as  soon  as  the  assessment  is  made.  (McDonald  v.  Thompson,  184 
U.  S.,  71;  Thompson  v.  German  Insurance  Company,  supra;  Deweese  v. 
Smith,  106  Fed.  Rep.,  438.) 

Set-off. — A  stockholder  of  an  insolvent  National  bank,  who  happens 
also  to  be  one  of  its  creditors,  can  not  cancel  or  diminish  the  assessment 
to  which  the  provisions  of  Sec.  5151,  Rev.  St.,  make  him  liable  by  off- 
setting his  individual  claim  against  it.    (Hobart,  Receiver,  etc.,  v.  Gould, 
8  Fed.  Rep.,  57.)     In  an  action  by  the  receiver  of  an  insolvent  National 
bank  to  recover  of  a  stockholder  an  assessment  on  his  shares,  the  de- 
fendant alleged  as  a  counter-claim  that  the  Comptroller  of  the  Currency 
had  directed  the  bank  to  restore  the  value  of  certain  securities  held 
by  it  which  had  been  reported  as  worthless  by  an  examiner;  that  cer- 
tain of  the  stockholders,  including  defendant,  had  raised  a  fund  which 
was  placed  in  the  hands  of  trustees  to  apply  so  much  as  might  be 
from  time  to  time  required  by  the  Comptroller  to  retire  such  securities; 
that  the  fund  was  deposited  with  the  bank  with  full  notice  of  the  pur- 
pose to  which  it  was  to  be  applied;  that  a  portion  had  been  used  to 
retire  the  securities  designated,   and  that  when  the  bank  failed  the 
balance  of  the  fund  came  into  the  hands  of  the  receiver,  and  was  now 
claimed  by  him  as  a  part  of  the  ordinary  assets  of  the  bank;  that  a 
certain  portion  of  this  balance  belonged  to  defendant,  which  amount 
he  asked  to  set  off  against  the  plaintiff's  demand :  Held,  That  a  general 
demurrer  based  on  the  ground  that  no  set-off  or  counterclaim  was  avail- 
able in  such  an  action  would  be  overruled,  as  the  claim  could  be  set  off 
if  it  was  of  such  a  nature  that  the  holder  would  be  entitled  to  receive 
the  full  amount  before  distribution  by  the  receiver  to  general  creditors. 
(Welles  V.  Stout,  38  Fed.  Rep.,  807.)    In  another  case  the  defendant,  for 
the  purpose  of  helping  a  bank,  of  which  complainant  was  a  stockholder, 
in  a  financial   crisis,   loaned   it   certain   securities   belonging  to   com- 
plainant, and  when  complainant  was  informed  of  the  fact  she  did  not 
object.     She  was  assured  by  the  bank's  officers  that  If  the  bank  was 
saved  the  securities  would  be  returned,  and  if  it  failed  the  avails  would 
be  credited  on  her  assessment  as  a  stockholder.    The  bank  failed,  and 
the  securities  were  not  returned:  Held.  That  she  was  not  entitled,  as 
against  other  creditors,  to  set  off  the  value  of  the  securities  against  her 
assessment,  but  was,  as  to  such  value,  on  the  same  footing  as  any  other 


63 

creditor.  (Sowles  v.  Witters,  39  Fed.  Rep.,  403.)  But  the  indebtedness 
on  the  assessment  of  a  stockholder  who  is  insolvent  may  be  set  off 
a.gainst  a  dividend,  payable  out  of  the  assets  of  the  bank,  on  a  balance 
due  him  on  his  deposit  account  with  the  bank  at  the  time  ot  its  failure. 
(King  V.  Armstrong,  50  Ohio  St.,  222.)  And  an  assignment  by  the  stock- 
holder of  his  claim  against  the  bank,  before  the  direction  of  the  Comp- 
troller to  enforce  his  liability,  but  after  the  insolvency  of  the  bank,  does 
not  affect  the  right  to  set  off  his  liability  against  the  dividend  due  on  his 
claim,  nor  does  the  fact  that  the  Comptroller,  at  the  time  of  the  assign- 
ment, had  not  determined  the  amount  necessary  to  be  collected  from 
the  stockholders  for  the  payment  of  the  creditors.  It  is  sufficient  that 
such  direction  has  been  given,  and  amount  so  determined,  when  the  set- 
off is  made.    (Id.) 

Agent  May  Not  Enforce. — An  agent  chosen  by  stockholders  to  take 
charge  of  the  business  of  a  National  bank  in  liquidation  can  not  en- 
force the  individual  liability  of  the  stockholders,  after  all  the  debts 
have  been  paid.  (Church  v.  Ayer,  80  Fed.  Rep.,  543;  Williamson  v. 
American  Bank,  109  Fed.  Rep.,  36.) 

Suit  by  Assignee. — Where  the  liability  has  become  fixed  by  the  as- 
sessment, the  right  of  action  thereon  may  be  assigned  by  the  receiver, 
and  the  suit  brought  in  the  name  of  the  assignee.  (Waldron  v.  Ailing, 
73  App.  Div.  (N.  Y.),  86.) 

Claim  Not  Entitled  to  Preference. — The  individual  liability  of  a 
stockholder  in  an  insolvent  National  bank  is  not  a  preferred  claim 
against  his  estate,  and  is  not  entitled  to  priority  of  payment  even 
though  the  estate  is  insolvent.  {In  Re  Beard's  Estate,  7  Wyoming, 
104.) 

Books  of  the  Bank  as  Evidence  in  Suit  to  Recover  Assessment. — 
The  books  of  a  National  bank  are,  among  the  shareholders,  public  rec- 
ords and  evidence  of  what  they  show,  and  are  admissible  against  a 
shareholder  in  an  action  brought  against  him  by  the  Receiver  to  recover 
an  assessment  upon  his  stock.    (Brown  v.  Ellis,  103  Fed.  Rep.,  834.) 

Successive  Assessments. — The  Comptroller  of  the  Currency  has 
power  to  levy  successive  assessments  upon  the  stockholders  In  an  in- 
solvent National  bank  where  the  aggregate  of  the  assesments  does  not 
exceed  the  total  liability  of  the  stockholders,  and  his  power  is  not  ex- 
hausted by  one  assessment.  (Studebaker  v.  Perry,  184  U.  S.,  252;  Aid- 
rich  V.  Campbell,  97  Fed.  Rep.,  663;  Studebaker  v.  Perry,  102  Fed.  Rep., 
947.)  And  a  judgment  in  favor  of  the  Receiver  for  the  recovery  of  an 
assessment  does  not  estop  him  from  maintaining  a  second  action  against 
the  same  shareholder  for  another  assessment  which  had  not  been  made 
or  was  not  due  when  the  first  action  was  commenced.  (Deweese  v. 
Smith,  106  Fed.  Rep.,  438.) 


64 

Purchase  Procured  by  Fraudulent  Representations  of  Officers. — 
In  an  action  at  law  by  the  Receiver  of  an  insolvent  National  bank  to  en- 
force the  individual  liability  of  a  shareholder,  the  latter  can  not  set  up 
as  a  defense  that  he  was  induced  to  purchase  the  stock  of  the  bank  by 
the  fraudulent  representations  of  its  officers.  Lantry  v.  Wallace,  182 
U.  S.,  536;  Scott  v.  Latimer,  89  Fed.  Rep.,  843.) 

Where  Bank  Has  Gone  Into  Liquidation. — Where  the  bank  has  gone 
into  voluntary  liquidation,  the  only  authorized  procedure  for  the  en- 
forcement of  the  individual  liability  of  its  stockholders  is  by  a  suit  in 
equity  in  the  nature  of  a  creditor's  suit  brought  on  behalf  of  all 
creditors  in  a  court  for  the  district  in  which  the  bank  is  located,  in 
which  the  necessity  and  extent  of  the  ratable  enforcement  of  the  stock- 
holders' liability  shall  be  determined.  (Williamson  v.  American  Bank, 
115  Fed.  Rep.,  793.)  Such  suit  should  be  brought  against  the  bank  and 
all  its  stockholders,  and,  in  case  ancillary  proceedings  should  be  neces- 
sary for  the  collection  from  non-resident  stockholders  of  their  ratable 
proportion  of  the  amount  necessary  to  pay  creditors,  such  suits  should 
be  authorized  by  the  court  of  original  jurisdiction,  and  brought  by  a 
Receiver  or  other  person  appointed  by  such  court.     (Id.) 

■ 

§  36.  Executors,  Trustees,  etc..  Not  Personally  Liable. — Persons 
holding  stock  as  executors,  administrators,  guardians,  or  trustees, 
shall  not  be  personally  subject  to  any  liabilities  as  stockholders; 
but  the  estates  and  funds  in  their  hands  shall  be  liable  in  like 
manner  and  to  the  same  extent  as  the  testator,  intestate,  ward,  or 
person  interested  in  such  trust-funds  would  be,  if  living  and  com- 
petent to  act  and  hold  the  stock  in  his  own  name.  (Rev.  Stat.  TJ. 
S.  Sec.  5152.) 

Application  of  Section. — ^This  section  is  of  general  application  and  Is 
not  limited  to  trustees  appointed  such  by  will  or  by  order  of  some  court 
or  judge.  (Lucas  v.  Coe,  86  Fed.  Rep.,  972.)  In  the  case  cited  C  sub- 
scribed for  stock  in  a  National  bank  as  trustee  for  H,  an  infant,  and  a 
certificate  was  issued  to  "  C  as  trustee  for  H;  "  afterwards,  the  capital 
stock  being  reduced,  this  certificate  was  surrendered  and  another  issued 
In  lieu  thereof  to  C  merely  "  as  trustee,"  without  naming  the  benefi- 
ciary. The  officers  of  the  bank  were  advised  that  C  held  the  stock  as 
trustee  precisely  as  in  the  surrendered  certificate.  Held,  That  C  was 
not  liable  for  an  assessment  upon  the  stock.     (Id.) 

An  executor  continues  to  be  liable  as  such  for  an  an  assessment  upon 
National  bank  stock  left  by  his  testator  until  he  has  transferred  the 
personal  property  belonging  to  the  estate.  (Baker  v.  Beach,  85  Fed. 
pep.,  836.) 


65 

Evidence  of  Ownership. — ^The  fact  that  the  stock  is  held  in  a  repre- 
sentative capacity  must  be  noted  on  the  stock-book  of  the  bank;  if 
a  person  appears  there  as  absolute  owner  of  the  stock  he  will  not  be 
permitted  to  deny  that  he  is  such.  (Davis  v.  Essex  Baptist  Society,  U. 
S.  D.  C,  44  Conn.,  569;  Lewis  v.  Switz,  74  Fed.  Rep.,  1.)  In  the  case 
first  cited  the  defendants  sought  to  show,  by  extrinsic  evidence,  that 
they  held  the  stock  as  trustees,  although  the  certificates  and  the  stock- 
ledger  did  not  disclose  such  fact.  This  it  was  held  they  could  not  do. 
The  Court  said:  "Creditors  have  a  right  to  know  who  have  pledged 
their  individual  liability.  If  the  trusteeship  does  not  appear  upon  the 
books  of  the  bank,  they  have  a  right  to  infer  that  the  stockholder  is 
personally  liable.  If  a  trustee  wishes  to  disclose  his  trusteeship  there 
is  no  difficulty  in  giving  notice  upon  the  books  of  the  bank.  If  he  does 
not  disclose  his  trusteeship  he  is  guilty  of  laches,  for  which  others 
should  not  suffer.  The  settlement  of  the  affairs  of  an  insolvent  bank 
would  be  rendered  a  matter  of  great  labor,  expense,  and  delay  if  per- 
sons who  appeared  upon  the  books  of  the  bank  as  individual  stock- 
holders were  permitted  to  relieve  themselves  by  proving  that  they  held 
the  stock  as  executors,  or  guardians,  or  trustees.  If  A  is  permitted  to 
prove  that  he  holds  his  stock  as  trustee  for  B,  and  B  is  permitted  to 
show  that  he  is  trustee  for  A,  litigation  would  be  protracted,  individual 
stockholders  would  suffer,  and  the  strength  of  the  personal  liability 
section  would  be  seriously  impaired." 

This  reasoning  appears  to  be  very  sound  and  forcible,  but  the  decision 
is  in  conflict  with  that  in  McMahon  v.  Macy  (51  N.  Y.,  155),  which 
arose  under  an  analogous  provision  in  New  York  Railroad  Act.  One  to 
whom  the  shares  are  assigned  in  trust  as  security  for  a  debt  due  a  third 
person,  and  following  whose  name  on  the  stock-book  of  the  bank  is  the 
word  "  trustee,"  is  not  liable  for  the  assessment  under  Section  5151,  and 
is  also  within  the  provision  of  Section  5152,  exempting  from  such  lia- 
bility persons  holding  stock  as  trustees.  (Welles  v.  Larrabee,  36  Fed. 
Rep.,  866.) 

§  37.  Depositaries  of  Public  Moneys. — All  National  banking  as- 
sociations, designated  for  that  purpose  by  the  Secretary  of  the 
Treasury,  shall  be  depositaries  of  public  money,  except  receipts 
from  customs,  under  such  regulations  as  may  be  prescribed  by  the 
Secretary;  but  receipts  derived  from  duties  on  imports  in  Alaska, 
the  Hawaiian  Islands,  and  other  islands  under  the  jurisdiction  of 
the  United  States  may  be  deposited  in  such  depositaries  subject 
to  such  regulatons;  and  such  depositaries  may  also  be  employed  as 
financial  agents  of  the  Gevemment;  and  they  shall  perform  all 
such  reasonable  duties,  as  depositaries  of  public  moneys  and  fi- 
ll ancia  J  agente  of  the  Government,  as  may  be  required  of  them. 


66 

The  Secretary  of  the  Treasury  shall  require  the  associations  thus 
designated  to  give  satisfactory  security,  by  the  deposit  of  United 
States  bonds  and  otherwise,  for  the  safe-keeping  and  prompt  pay- 
ment of  the  public  money  deposited  with  them,  and  for  the  faith- 
ful performance  of  their  duties  as  financial  agents  of  the  Govern- 
ment. And  every  association  so  designated  as  receiver  or  de- 
positary of  the  public  money  shall  take  and  receive  at  par  all  of 
the  National  currency  bills,  by  whatever  association  issued,  which 
have  been  paid  into  the  Grovemment  for  internal  revenue  or  for 
loans  or  stocks.  (Rev.  Stat.  U.  S.  Sec.  5153,  as  amended  by  act 
March  3,  1901,  Ch.  871;  32  Stat.  U.  S.  1448.) 

All  arrangements  to  become  public  depositaries  must  be  made  with 
the  Secretary  of  the  Treasury.  The  security  required  is  within  the  dis- 
cretion of  the  Secretary.  The  requirement  usually  is  United  States 
bonds,  or  bonds  guaranteed  by  the  United  States.  A  deposit  is  allowed 
to  the  extent  of  the  full  value  of  the  bonds,  or  more,  according  to  their 
value,  but  is  always  kept  below  the  value  of  the  security.  The  Secre- 
tary of  the  Treasury  could  legally  accept  other  security  than  United 
States  bonds  satisfactory  to  him  and  has  done  so.  (See  offer  of  Sept.  29, 
1902,  to  accept  State  and  municipal  bonds  accepted  by  savings  banks 
under  the  laws  of  such  States  as  had  legislated  on  the  subject.) 

A  National  bank,  though  not  designated  as  a  United  States  depositary, 
which  receives  a  deposit  of  United  States  moneys  from  a  postmaster, 
thereby  assumes  a  fiduciary  relation  to  the  Government,  and  is  liable 
to  the  United  States  as  a  bailee  of  such  funds.  (United  States  v.  Na- 
tional Bank  of  Asheville,  73  Fed.  Rep.,  379.) 

For  further  information  as  to  Government  Depositaries  see  page  265. 

§  38.  Conversion  of  State  into  National  Banks. — Any  bank  in- 
corporated by  special  law,  or  any  banking  institution  organized 
under  a  general  law  of  any  State,  may  become  a  National  asso- 
ciation under  this  Title  by  the  name  prescribed  in  its  organization 
certificate;  and  in  such  case  the  articles  of  association  and  the  or- 
ganization certificate  may  be  executed  by  a  majority  of  the  directors 
of  the  bank  or  banking  institution ;  and  the  certificate  shall  declare 
that  the  owners  of  two-thirds  of  the  capital  stock  have  authorized 
the  directors  to  make  such  a  certificate,  and  to  change  and 
convert  the  bank  or  banking  institution  into  a  National  associa- 
tion. A  majority  of  the  directors,  after  executing  the  articles  of  as- 
sociation and  organization  certificate,  shall  have  power  to  execute  all 
other  papers,  and  to  do  whatever  may  be  required  to  make  its 


organization  perfect  and  complete  as  a  National  association.  The 
shares  of  any  such  bank  may  continue  to  be  for  the  same  amount 
each  as  they  were  before  the  conversion,  and  the  directors  may  con- 
tinue to  be  the  directors  of  the  association  until  others  are  elected 
or  appointed  in  accordance  with  the  provisions  of  this  chapter; 
and  any  State  bank  which  is  a  stockholder  in  any  other  bank,  by 
authority  of  State  laws,  may  continue  to  hold  its  stock,  although 
either  bank,  or  both,  may  be  organized  under  and  have  accepted 
the  provisions  of  this  Title.  When  the  Comptroller  of  the  Cur- 
rency has  given  to  such  association  a  certificate,  under  his  hand 
and  official  seal,  that  the  provisions  of  the  Title  have  been  complied 
with,  and  that  it  is  authorized  to  commence  the  business  of  bank- 
ing, the  association  shall  have  the  same  powers  and  privileges,  and 
shall  be  subject  to  the  same  duties,  responsibilities,  and  rules,  in 
all  respects  as  are  prescribed  for  other  associations,  originally  or- 
ganized as  National  banking  associations,  and  shall  be  held  and 
regarded  as  such  an  association.  But  no  such  association  shall 
have  a  less  capital  than  the  amount  prescribed  for  associations 
organized  under  this  Title.     (Kev.  Stat.  U.  S.  Sec.  5154.) 

AuTHOEiTY  Required. — This  section  was  enacted  In  order  to  induce 
State  banks  to  enter  the  National  system.  The  authority  of  two- thirds 
of  the  stock  is  required  to  empower  the  directors  to  act.  It  has  been 
said  by  the  Supreme  Court  of  the  United  States  that  no  authority  from 
a  State  is  necessary  to  convert  a  State  bank  into  a  National  bank 
(Casey  v.  Galli,  94  U.  S.,  673),  but  many  States  have  passed  enabling 
acts,  both  to  enable  State  banks  to  become  National  banks  and  to  enable 
National  banks  to  become  State  banks.  State  banks  intending  to  con- 
vert into  National  banks  should  be  guided  by  the  State  statute  as  to  the 
closing  of  the  affairs  under  the  State  charter.  From  the  special 
privilege  granted  to  converted  State  banks  to  continue  to  hold  the  stock 
in  other  banks  they  held  when  State  banks,  it  may  perhaps  be  inferred 
that  the  power  of  holding  stock  in  other  banks  was  not  intended  to  be 
granted  to  all  National  associations. 

CoBPOEATE  Relation  to  Old  Bank. — The  conversion  of  a  State  bank 
into  a  National  bank  does  not  destroy  its  identity  or  its  corporate  exist- 
ence; it  is  not  a  closing  of  business,  but  simply  a  continuation  of 
the  same  body,  with  the  same  officers  and  stockholders,  the  same  prop- 
erty, assets  and  business  of  banking  under  a  changed  jurisdiction. 
(Metropolitan  National  Bank  v.  Clagett,  141  U.  S.,  520.)  The  conversion 
and  change  of  name  do  not  affect  its  right  to  sue  on  liabilities  incurred 
to  it  under  its  former  name.     (Michigan  Insurance  Bank  v.  Eldred,  143 


V.  S.,  293.)  Thus,  where  a  State  bank  at  the  time  of  its  change  to  a 
National  bank  held  a  continuing  guaranty  of  loans  made  by  it  to  one 
W.,  upon  the  strength  of  which  it  had  made  loans  and  after  the  change 
further  advances  were  made,  it  was  held  that  an  action  was  maintain- 
able by  the  National  bank  upon  the  guaranty,  and  that  the  guarantor 
was  liable  for  the  loans  made  both  before  and  after  the  change,  (City 
National  Bank  v.  Phelps,  97  N.  Y.,  44.)  And  conversely  the  National 
bank  is  liable  after  the  conversion  for  all  the  obligations  of  the  old  in- 
stitution. (Cofiee  V.  National  Bank  of  Missouri,  46  Mo.,  140;  Kelsey 
V.  National  Bank  of  Crawford,  69  Pa.  St.,  426.)  For  example,  it  will  be 
liable  to  holders  of  its  outstanding  circulating  notes,  issued  in  accord- 
ance with  State  laws.  (Metropolitan  National  Bank  v.  Clagett,  141 
U.  S.,  520.)  In  the  case  last  cited  it  was  held  that  the  provisions  of  the 
statute  of  New  York  (Laws  1859,  c.  236)  as  to  the  redemption  of  circu- 
lating notes  issued  by  the  banks  of  such  State,  and  the  release  of  the 
bank  if  the  notes  should  not  be  presented  within  six  years,  do  not 
apply  to  a  bank  converted  into  a  National  bank.  And  it  has  been  held 
that  a  State  statute  which  continues  the  bank  as  a  body  corporate 
for  certain  purposes,  for  a  term  after  the  conversion,  does  not  reljeve 
the  National  bank  from  liability  for  the  debts  of  the  bank  as  a 
State  institution.  (Atlantic  National  Bank  v.  Harris,  118  Mass.,  147.) 
A  National  bank,  organized  as  the  successor  of  a  State  bank,  may  take 
and  hold  the  assets  of  the  bank  whose  place  it  takes,  though  there  was 
not  in  form  a  conversion  from  a  State  to  a  National  corporation,  but 
the  organization  of  a  new  corporation.  (Bank  v.  Mclntyre,  40  Ohio  St., 
528.)  And  such  bank  will  be  liable  to  the  depositors  of  the  former 
bank.    (Eans  v.  Exchange  Bank,  79  Mo.,  182.) 

Assets  of  Conveetinq  Bank. — The  Comptroller  of  the  Currency  has 
ruled  that  a  bank  entering  the  National  system  by  conversion  will  be 
allowed  to  carry  over  to  and  include  in  its  assets  as  a  National  bank 
only  such  assets  as  are  allowed  by  the  National  Bank  Act,  excluding 
any  assets  prohibited  by  Sections  5137  and  5200,  Revised  Statutes, 
excepting  that  under  certain  circumstances  and  an  assurance  of 
speedy  liquidation  a  small  portion  of  prohibited  assets  is  sometimes 
permitted  to  be  taken  over. 

Charteb  of  State  Bank. — ^When  a  State  bank  has  been  converted 
into  a  National  bank,  it  thereby  surrenders  its  charter  as  a  State  bank, 
and  when  the  period  during  which  it  may  do  business  as  a  National 
bank  has  expired,  its  corporate  existence,  both  as  a  State  bank  and  also 
as  a  National  bank,  is  at  an  end.  (Hay den  v.  Bank  of  Syracuse,  59 
Hun.,  620.) 

Directors,  Name,  etc. — All  of  the  directors  of  the  State  bank  at  the 
time  of  conversion  will  continue  to  be  directors  of  the  National  bank 


69 

until  others  are  appointed  or  elected,  though  some  of  them  may  not 
have  joined  in  the  execution  of  the  articles  of  association  and  organiza- 
tion certificate.  (Lockwood  v.  The  American  National  Bank,  9  R. 
I.,  308.)  A  State  law  authorizing  National  banks  which  have  been 
converted  from  State  banks  to  use  the  name  of  the  original  corpora- 
tion for  the  purpose  of  prosecuting  and  defending  suits  is  not  in 
conflict  with  the  National  banking  law,  and  therefore  proceedings  based 
upon  a  judgment  obtained  before  the  conversion  may  be  instituted  by 
such  association  in  its  former  corporate  name.  (Thomas  v.  Farmers' 
Bank  of  Maryland,  46  Md.,  43.)  When  a  bank  has  been  converted,  new 
certificates  of  stock  are  not  necessary.  (Keyser  v.  Hitz,  133  U.  S.,  138.) 
Savings  banks  organized  in  the  District  of  Columbia  under  an  act  of 
Congress  and  having  a  capital  stock  paid  up  in  whole  or  in  part,  may 
be  converted  into  National  banks.  (Keyser  v.  Hitz.  133  U.  S.,  138.) 
For  full  information,  instructions  and  forms  see  page  226. 

§  39.  Same  Subject — State  Banks  Having  Branches. — It  shall 
be  lawful  for  any  bank  or  banking  association,  organized  under 
State  laws,  and  having  branches,  the  capital  being  joint  and  as- 
signed to  and  used  by  the  mother-bank  and  branches  in  definite 
proportions,  to  become  a  N'ational  banking  association  in  conformity 
with  existing  laws,  and  to  retain  and  keep  in  operation  its  branches, 
or  such  one  or  more  of  them  as  it  may  elect  to  retain ;  the  amount  of 
the  circulation  redeemable  at  the  mother-bank,  and  each  branch  to 
be  regulated  by  the  amount  of  capital  assigned  to  and  used  by  each. 
(Kev.  Stat.  U.  S.  Sec.  5155.) 

The  authority  expressly  conferred  by  this  section  appears  to  exclude 
by  implication  the  right  to  establish  branches  in  any  other  case;  and 
this  has  been  the  view  uniformly  held  by  the  Comptrollers  of  the  Cur- 
rency. 

§  40.  Conversion  of  National  Gold  Banks. — That  any  National 
gold  bank  organized  under  the  provisions  of  the  laws  of  the  United 
States  ma}^  in  the  manner  and  subject  to  the  provisions  prescribed 
by  section  fifty-one  hundred  and  fifty-four  of  the  Eevised  Statutes 
of  the  United  States,  for  the  conversion  of  banks  incorporated 
under  the  laws  of  any  State,  cease  to  be  a  gold  bank,  and  become 
such  an  association  as  is  authorized  by  section  fifty-one  hundred  and 
thirty-three,  for  carrying  on  the  business  of  banking,  and  shall  have 
the  same  powers  and  privileges,  and  shall  be  subject  to  the  same 
duties,  responsibilities,  and  rules,  in  all  respects,  as  are  by  law 


prescribed  for  such  associations :  Provided,  That  all  certificates 
of  organization  which  shall  be  issued  under  this  act  shall  bear  the 
date  of  the  original  organization  of  each  bank  respectively  as  a  gold 
bank.    (Act  Feb.  14,  1880,  Ch.  21;  21  Stat.  U.  S.  66.) 

All  the  gold  banks  have  either  gone  out  of  existence  or  have  been 
converted  into  ordinary  National  banking  associations  under  this  Act. 

at 
§  41.  Eights  of  Associations  Organized  Under  Act  of  1863. — 

Nothing  in  this  Title  shall  affect  any  appointments  made,  acts  done, 
or  proceedings  had  or  commenced  prior  to  the  third  day  of  June, 
eighteen  hundred  and  sixty-four,  in  or  toward  the  organization  of 
any  National  banking  association  under  the  act  of  February 
twenty-five,  eighteen  hundred  and  sixty-three;  but  all  associations 
which,  on  the  third  day  of  June,  eighteen  hundred  and  sixty-four, 
were  organized  or  commenced  to  be  organized  under  that  act,  shall 
enjoy  all  the  rights  and  privileges  granted,  and  be  subject  to  all 
the  duties,  liabilities,  and  restrictions  imposed  by  this  Title,  not- 
withstanding all  the  steps  prescribed  by  this  Title  for  the  organi- 
zation of  associations  were  not  pursued,  if  such  associations  were 
duly  organized  under  that  act.     (Eev.  Stat.  U.  S.  Sec.  5156.) 

§  42.  Change  of  Name  and  Location. — That  any  National  bank- 
ing association  may  change  its  name  or  the  place  where  its  opera- 
tions of  discount  and  deposits  are  to  be  carried  on  to  any  other 
place  within  the  same  State,  not  more  than  thirty  miles  distant, 
with  the  approval  of  the  Comptroller  of  the  Currency,  by  the  vote 
of  shareholders  owning  two-thirds  of  the  stock  of  such  association. 
A  duly  authenticated  notice  of  the  vote  and  of  the  new  name  or 
location  selected  shall  be  sent  to  the  office  of  the  Comptroller  of  the 
Currency ;  but  no  change  of  name  or  location  shall  be  valid  until  the 
Comptroller  shall  have  issued  his  certificate  of  approval  of  the  same. 
(Act  May  1,  1886,  Ch.  73,  Sec.  2;  24  Stat.  U.  S.  18.) 

Mode  of  Procedure. — Prior  to  the  passage  of  this  law  no  bank  could 
change  its  name  or  location  except  by  special  act  of  Congress. 

The  Comptroller  of  the  Currency  furnishes  on  application  blank  forms 
to  be  used  in  making  changes  of  name  or  location.  All  that  is  required 
is  for  the  shareholders  representing  the  requisite  amount  of  capital  stock 
to  pass  a  suitable  resolution  authorizing  such  change,  and  for  the 
officers  of  the  bank  to  forward  a  certified  copy  of  such  resolution  to  the 


71 

Comptroller  of  the  Currency,  when.  If  he  approves  of  the  change,  he  will 
issue  his  certificate  to  the  effect  that  the  change  has  been  duly  au- 
thorized and  is  approved  by  him.  There  seems  to  be  no  reason  why  a 
change  of  name  may  not  be  made  as  often  as  desired.  And  perhaps 
there  may  be  more  than  one  removal,  but  it  would  seem  that  the  bank 
could  not  by  several  successive  removals  get  to  a  place  more  than  thirty 
miles  distant  from  its  original  location. 

This  act  is  to  be  construed  with  reference  to  the  other  provisions  of 
law  governing  the  National  banks;  and,  therefore,  where  the  removal 
is  to  be  made  to  a  larger  place,  the  capital  stock  must  first  be  increased 
to  the  amount  required  for  banks  in  such  place.  It  is  important  for 
the  stockholders  to  bear  this  in  mind  when  determining  the  question  of 
removal. 

As  in  other  cases  where  a  two-thirds  vote  of  the  stockholders  is  re- 
quired, this  means  a  vote  representing  two-thirds  of  the  whole  number 
of  shares  and  not  merely  two-thirds  of  those  represented  at  the  meeting. 
It  is  not  necessary  to  forward  to  the  Comptroller  any  evidence  to  show 
that  the  place  to  which  the  removal  is  to  be  made  is  not  more  than 
thirty  miles  distant,  as  the  Comptroller  can  readily  satisfy  himself  as 
to  compliance  with  the  law  in  this  particular.  There  have  been 
several  cases  of  removal  under  this  act,  and  a  number  of  changes  of 
name. 

For  form  of  certificate  of  vote  of  shareholders,  and  resolution  for 
transfer  of  bonds  see  page  321-2. 

§  43.  Same  Subject — Continuance  of  Liabilities. — That  all 
debts,  liabilities,  rights,  provisions,  and  powers  of  the  association 
under  its  old  name  shall  devolve  upon  and  inure  to  the  associa- 
tion under  its  new  name.  (Act  May  1,  1886,  Ch.  73,  Sec.  3;  24 
Stat.  U.  S.  18.) 

§  44.  Same  Subject. — That  nothing  in  this  act  contained  shall  be 
so  construed  as  in  any  manner  to  release  any  N'ational  banking  as- 
sociation under  its  old  name  or  at  its  old  location  from  any  liability, 
or  affect  any  action  or  proceeding  in  law  in  which  said  association 
may  be  or  become  a  party  or  interested.  (Act  May  1, 1886,  Ch.  73, 
Sec.  4;  24  Stat.  U.  S.  18.) 

§  45.  Extension  of  Corporate  Existence. — ^That  any  National 
banking  association  organized  under  the  Acts  of  February  twenty- 
fifth,  eighteen  hundred  and  sixty-three,  June  third,  eighteen  hun- 
dred and  sixty-four,  and  February  fourteenth,  eighteen  hundred  and 
eighty,  or  under  sections  fifty-one  hundred  and  thirty-three,  fifty- 


72 

one  hundred  and  thirty-four,  fifty-one  hundred  and  thirty-five,  fifty- 
one  hundred  and  thirty-six,  and  fifty-one  hundred  and  fifty-four 
of  the  Revised  Statutes  of  the  United  States,  may,  at  any  time 
within  the  two  years  next  previous  to  the  date  of  the  expiration  of 
its  corporate  existence  under  present  law,  and  with  the  approval  of 
the  Comptroller  of  the  Currency,  to  be  granted  as  hereinafter 
provided,  extend  its  period  of  succession  by  amending  its  articles 
of  association  for  a  term  of  not  more  than  twenty  years  from  the 
expiration  of  the  period  of  succession  named  in  said  articles  of 
association,  and  shall  have  succession  for  such  extended  period,  un- 
less sooner  dissolved  by  the  act  of  shareholders  owning  two-thirds 
of  its  stock,  or  unless  its  franchise  becomes  forfeited  by  some  vio- 
lation of  law,  unless  hereafter  modified  or  repealed.  (Act.  July  13, 
1882,  Ch.  290,  Sec.  1;  22  U.  S.  Stat.  162.) 

§  46.  Same  Subject — Further  Extension. — That  the  Comptroller 
of  the  Currency  is  hereby  authorized,  in  the  manner  provided  by, 
and  under  the  conditions  and  limitations  of,  the  Act  of  July 
twelfth,  eighteen  hundred  and  eighty-two,  to  extend  for  a  further 
period  of  twenty  years  the  charter  of  any  National  banking  associa- 
tion extended  under  said  Act  which  shall  desire  to  continue  its 
existence  after  the  expiration  of  its  charter.  (Act  April  12,  1902, 
Ch.  503,  32  Stat.  U.  S.,  102.) 

The  regulations  of  the  Comptroller's  oflBce  for  re-extension  of  charter 
are  the  same  as  for  original  extension.  (See  pages  257-62.  The  Comp- 
troller should  be  notified  sixty  days  before  expiration  of  old  charter  of 
intention  to  extend  or  to  close  out  the  business  of  the  bank,  in  order 
that  he  may  satisfy  himself  that  the  bank  is  solvent. 

§  47.  Same  Subject — How  Articles  of  Association  Amended. — 

That  such  amendment  of  said  articles  of  association  shall  be  au- 
thorized by  the  consent  in  writing  of  shareholders  owning  not  less 
than  two-thirds  of  the  capital  stock  of  the  association;  and  the 
board  of  directors  shall  cause  such  consent  to  be  certified  under  the 
seal  of  the  association,  by  its  president  or  cashier,  to  the  Comp- 
troller of  the  Currency,  accompanied  by  an  application  made  by  the 
president  or  cashier  for  the  approval  of  the  amended  articles  of  as- 
sociation by  the  Comptroller;  and  such  amended  articles  of  as- 
sociation shall  not  be  valid  until  the  Comptroller  shall  give  to  snch 


73 

association  a  certificate,  under  his  hand  and  seal,  that  the  associa- 
tion has  complied  with  all  the  provisions  required  to  be  complied 
with,  and  is  authorized  to  have  succession  for  the  extended  period 
named  in  the  amended  articles  of  association.  (Act  July  12,  1882, 
Ch.  290,  Sec.  2;  22  U.  S.  Stat.  162.) 

For  instructions  and  forms  see  page  257-62.) 

§  48.  Same  Subject — Special  Examination  of  Extended  Bank — 
Certificate  of  Comptroller. — That  upon  the  receipt  of  the  applica- 
tion and  certificate  of  the  association  provided  for  in  the  preceding 
section,  the  Comptroller  of  the  Currency  shall  cause  a  special  ex- 
amination to  be  made,  at  the  expense  of  the  association,  to  deter- 
mine its  condition;  and  if  after  such  examination  or  otherwise  it 
appears  to  him  that  said  association  is  in  a  satisfactory  condition, 
he  shall  grant  his  certificate  of  approval  provided  for  in  the  pre- 
ceding section,  or  if  it  appears  that  the  condition  of  said  associa- 
tion is  not  satisfactory,  he  shall  withhold  such  certificate  of  ap- 
proval.    (Act  July  12,  1882,  Ch.  290,  Sec.  31;  22  U.  S.  Stat.  162.) 

Upon  receipt  of  the  application  and  papers,  they  are  examined  in  the 
Comptroller's  office,  and  if  found  satisfactory  the  association  is  notified 
that  the  papers  are  placed  on  file,  and  that  the  examination  will  be 
made  in  due  course.  The  examination  is  usually  made  shortly  before 
the  date  of  expiration  of  the  period  of  succession,  and  as  soon  as  the 
examiner's  report  is  received,  if  satisfactory,  the  certificate  approving 
the  extension  is  issued  a  few  days  before  the  date  of  the  expiration. 
This  certificate  of  approval  is  required  to  be  published  by  regulation  of 
the  Comptroller's  office. 

§  49.  Privilegfes,  liabilites,  etc.,  of  Extended  Banks. — That  any 
association  so  extending  the  period  of  its  succession  shall  continue 
to  enjoy  all  the  rights  and  privileges  and  immunities  granted,  and 
shall  continue  to  be  subject  to  all  the  duties,  liabilities  and  re- 
strictions imposed  by  the  Eevised  Statutes  of  the  United  States  and 
other  Acts  having  reference  to  National  banking  associations,  and 
it  shall  continue  to  be  in  all  respects  the  identical  association  it  was 
before  the  extension  of  its  period  of  succession.  (Act  July  12,  ISSS^ 
Chap.  290;,  Sec.  4;  22  U.  S.  Stat.  162.) 


74 

A  bond  given  to  a  National  bank  by  the  individual  members  of  a  cor- 
poration to  secure  such  paper  as  the  bank  may  discount  for  the  corpora- 
tion does  not  expire  with  the  termination  of  the  twenty  years  for  which 
the  bank  was  originally  incorporated,  and  the  obligors  are  liable  for  dis- 
counts made  after  the  bank  has  extended  the  period  of  its  existence. 
(The  National  Exchange  Bank  of  Hartford  v.  Guy,  57  Conn.,  224.) 

§  50.  Withdrawal  of  Shareholders;  Preference  in  Allotment. — 
That  when  any  National  banking  association  has  amended  its  ar- 
ticles of  association  as  provided  in  this  Act,  and  the  Comptroller  has 
granted  his  certificate  of  approval,  any  shareholder  not  assenting  to 
such  amendment  may  give  notice  in  writing  to  the  directors,  within 
thirty  days  from  the  date  of  the  certificate  of  approval,  of  his  desire 
to  withdraw  from  said  association,  in  which  case  he  shall  he  entitled 
to  receive  from  said  banking  association  the  value  of  the  shares  so 
held  by  him,  to  be  ascertained  by  an  appraisal  made  by  a  committee 
of  three  persons,  one  to  be  selected  by  such  shareholder,  one  by  the 
directors,  and  the  third  by  the  first  two;  and  in  case  the  value  so 
fixed  shall  not  be  satisfactory  to  any  such  shareholder,  he  may  ap- 
peal to  the  Comptroller  of  the  Currency,  who  shall  cause  a  re- 
appraisal to  be  made,  which  shall  be  final  and  binding;  and  if  said 
reappraisal  shall  exceed  the  value  fixed  by  said  committee,  the  bank 
shall  pay  the  expenses  of  said  reappraisal,  and  otherwise  the  appel- 
lant shall  pay  said  expenses;  and  the  value  so  ascertained  and  de- 
termined shall  be  deemed  to  be  a  debt  due,  and  be  forthwith  paid, 
to  said  shareholder,  from  said  bank ;  and  the  shares  so  surrendered 
and  appraised  shall,  after  due  notice,  be  sold  at  public  sale,  within 
thirty  days  after  the  final  appraisal  provided  in  this  section:  PrO' 
vided.  That  in  the  organization  of  any  banking  association,  in- 
tended to  replace  any  existing  banking  association,  and  retaining 
the  name  thereof,  the  holders  of  stock  in  the  expiring  association 
shall  be  entitled  to  preference  in  the  allotment  of  the  shares  of  the 
new  association  in  proportion  to  the  number  of  shares  held  by  them 
respectively  in  the  expiring  association.  (Act  July  12,  1882,  Ch. 
290,  Sec.  5;  22  U.  S.  Stat.  162.) 

§  61.  Banks  Not  Extending^ — Continuance  of  Franchise  for  Pur- 
pose of  Liquidation. — That  National  banking  associations  whose 
corporate  existence  has  expired,  or  shall  hereafter  expire,  and  which 
do  not  avail  themselves  of  the  provisions  of  this  Act,  shall  be  re- 


75 

quired  to  comply  with  the  provisions  of  sections  fifty-two  hundred 
and  twenty-one  and  fifty-two  hundred  and  twenty-two  of  the  Ee- 
vised  Statutes  in  the  same  manner  as  if  the  shareholders  had  voted 
to  go  into  liquidation,  as  provided  in  section  fifty-two  hundred  and 
twenty  of  the  Kevised  Statutes ;  and  the  provisions  of  sections  fifty- 
two  hundred  and  twenty-four  and  fifty-two  hundred  and  twenty-five 
of  the  Eevised  Statutes  shall  also  he  applicable  to  such  associa- 
tions, except  as  modified  by  this  Act;  and  the  franchise  of  such 
association  is  hereby  extended  for  the  sole  purpose  of  liquidating 
their  affairs  until  such  affairs  are  finally  closed.  (Act  July  12, 
1882,  Ch.  290,  Sec.  7;  22  Stat.  U.  S.  162.) 

The  Comptroller  sends  blanks  to  expiring  associations  to  enable  them 
to  give  the  notice  to  his  office  required  by  Section  5222,  Revised  Statutes, 
see  page  251.  Such  expiring  associations  must,  within  six  months 
from  the  date  of  expiration  of  the  charter,  deposit  lawful  money  to 
retire  their  circulation. 

§  52.  Limitation  of  Banking  Under  Territorial  law. — That  sec- 
tion eighteen  hundred  and  eighty-nine,  title  twenty-three  of  the 
Eevised  Statutes  of  the  United  States  be  amended  and  read  as 
follows : 

"The  legislative  assemblies  of  the  several  Territories  shall  not 
grant  private  charters  or  special  privileges,  but  they  may,  by 
general  incorporation  acts,  permit  persons  to  associate  themselves 
together  as  bodies  corporate  for  mining,  manufacturing,  and  other 
industrial  pursuits,  and  for  conducting  the  business  of  insurance, 
banks  of  discount  and  deposit  (but  not  of  issue),  loan,  trust  and 
guarantee  associations,  and  for  the  construction  or  operation  of 
railroads,  wagon-roads,  irrigating  ditches  and  the  colonization  and 
improvements  of  lands  in  connection  therewith,  or  for  colleges, 
seminaries,  churches,  libraries,  or  any  other  benevolent,  charitable, 
or  scientific  association."  (Act  July  30,  1886,  Ch.  818,  Sec.  5; 
24  Stat.  U.  S.  170.) 

§  53.  ITational  Banks  in  Oklahoma. — ^That  the  provisions  of 
title  sixty-two  of  the  Revised  Statutes  of  the  United  States  relating 
to  National  banks,  and  all  amendments  thereto,  shall  have  the 
same  force  and  effect  in  the  Territory  of  Oklahoma  as  elsewhere  in 


76 

the  United  States :  Provided,  That  persons  otherwise  qualified  to 
act  as  directors  shall  not  be  required  to  have  resided  in  said  Terri- 
tory for  nwre  than  three  months  immediately  preceding  their  elec- 
tion as  such.  (Act  May  2,  1890,  Ch.  182,  Sec.  17;  26  Stat.  U. 
S.  181.) 

§  54.  Branch  Banks  at  Columbian  Exposition. — That  any  Na/- 
tional  bank  located  in  the  city  of  Chicago  and  State  of  Illinois  may 
be  designated  by  the  World's  Columbian  Exposition  to  conduct  a 
banking  office  upon  the  exposition  grounds,  and  upon  such  designa- 
tion being  approved  by  the  Comptroller  of  the  Currency,  said  bank 
is  hereby  authorized  to  open  and  conduct  such  ofifice  as  a  branch  of 
the  bank  subject  to  the  same  restrictions,  and  having  the  same 
rights  as  the  bank  to  which  it  belongs :  Provided,  That  the  branch 
office  authorized  hereby  shall  not  be  operated  for  a  longer  period 
than  two  years,  beginning  not  earlier  than  July  first,  eighteen 
hundred  and  ninety-two,  and  closing  not  later  than  July  first, 
eighteen  hundred  and  ninety-four.  (Act  May  12,  1892,  Ch.  71; 
27  Stat.  U.  S.  32.) 

§  55.  Branch  Banks  at  Louisiana  Pnrcliase  Exposition. — That 

any  bank  or  trust  company  located  in  the  city  of  St.  Louis  or  State 
of  Missouri  may  be  designated  by  the  Louisiana  Purchase  Ex- 
position Company  to  conduct  a  banking  office  upon  the  exposition 
grounds,  and  if  the  bank  so  designated  shall  be  a  National  bank, 
upon  such  designation  being  approved  by  the  Comptroller  of  the 
Currency,  said  National  bank  is  hereby  authorized  to  open  and 
conduct  such  office  as  a  branch  of  the  bank,  subject  to  the  same 
restrictions,  and  having  the  same  rights  as  the  bank  to  which 
it  belongs:  Provided,  That  the  branch  office  authorized  hereby, 
if  the  same  shall  be  a  branch  of  a  National  bank,  shall  not  be 
operated  for  a  period  longer  than  two  years,  beginning  not  earlier 
than  July  first,  nineteen  hundred  and  two,  and  closing  not  later 
than  July  first,  nineteen  hundred  and  four.  (Act  March  3,  1901, 
Ch.  864,  Sec.  21;  31  Stat.  U.  S.  1444.) 


CHAPTER   III. 
Issue  and  Redemption  of  CiROULATiNa  Notes. 

Section  56.  Application  of  Chapter. 

57.  United  States  Bonds  Defined. 

58.  United  States  Bonds  to  be  Deposited. 

59.  Amount  of  Bonds  to  be  Deposited. 

.  60.  Increase  and  Decrease  of  Capital  and  Bonds. 

61.  Exchange  of  Coupon  Bonds. 

62.  Issue  of  Two  Per  Cent.  Bonds  Authorized — Deposit 

of  as  Security  for  Circulating  Notes. 

63.  Transfer  of  Bonds  to  and  by  Treasurer. 

64.  Registry  of  Bond  Transfers. 

65.  Association  to  Be  Advised  of  Transfers. 

66.  Comptroller  and  Treasurer  to  Have  Access  to  Books. 

67.  Annual  Examination  of  Bonds. 

68.  Bonds  to  be  Held  as  Security  for  Circulation — In- 

terest on — Depreciation — ^Exchange  of  Bonds. 

69.  Delivery  of  Circulation  to  Associations. 

70.  Printing  of  Circulating  Notes^  Denominations,  etc. 

71.  Plates  and  Dies — Expenses  of  Bureau. 

72.  Charter  Number  of  Bank  to  Be  Printed  on  its  Notes. 

73.  Annual  Examination  of  Plates,  Dies,  etc. 

74.  Issue  of  Small  Notes  Limited. 

75.  Limit  of  Circulation,  etc..  Repealed. 

76.  Limit  of  Circulation  of  Gold  Banks  Repealed. 

77.  For  What  Circulating  Notes  Receivable. 

78.  Bank  Liable  Though  Notes  not  Signed  or  Signatures 

Forged. 

79.  Issue  of  Other  Notes  Prohibited. 

80.  Destroying  and  Replacing  Mutilated  Notes. 

81.  National  Gold  Banks. 

82.  Reserve  Required  of  Gold  Banks. 

83.  Penalties  for  Imitating  National  Bank  Notes,  etc. 

84.  Penalty  for  Mutilating  Notes,  etc. 

85.  Redemption  Agents — Redemption  at  Counter  of  Issn- 

ing  Bank. 

77 


78 

86.  Redemption  Fund — Redemption  of  Notes  at  U.  S. 

Treasury. 

87.  Redemption  Fund  Covered  into  Treasury. 

88.  Retiring  Circulation. 

89.  Same  Subject. 

90.  Circulating  Notes  of  Extended  Banks — Lawful  Money 

Deposit — Expense  of  New  Plates. 

91.  Deposit  to  Redeem  Circulation  of  Liquidating  Banks. 

92.  Reassignment  of  Bonds,  Redemption  of  Notes,  etc., 

in  such  case. 

93.  Destruction  of  Redeemed  Notes  of  Liquidating  Banks. 

94.  Mode  of  Protest  of  Notes. 

95.  Examination  by  Special  Agent — Forfeiture  of  Bonds. 

96.  Bank  Not  to  Do  Business  After  Protest  of  Notes. 

97.  Redemption  of  Notes  at  Treasury. 

98.  Sale  of  Bonds;  the  United  States  to  Have  a  Lien 

Upon  Assets. 

99.  Sale  of  Bonds  at  Private  Sale. 

100.  Expense  of  Transporting  and  Assorting  Notes — Cost 

of  Plates. 

101.  Same  Subject. 

102.  Disposition    to    be    Made    of    Notes    Redeemed   by 

Treasurer. 

103.  Cancellation  of  Notes. 

104.  Mode  of  Destruction. 

§  66.  Application  of  Chapter. — The  provisions  of  Chapters  two, 
three  and  four  of  this  Title,  which  are  expressed  without  restric- 
tive words,  as  applying  to  "  National  banking  associations,"  or  to 
"associations,"  apply  to  all  associations  organized  to  carry  on  the 
business  of  banking  under  any  Act  of  Congress.  (Rev.  Stat.  U. 
S.   See.   5157.) 

This  section  gives  the  same  rights  to  all  National  banking  associations 
at  whatever  date  organized. 

§  57.  United  States  Bonds  Defined. — ^The  term  "United  States 
bond,"  as  used  throughout  this  chapter,  shall  be  construed  to 
mean  registered  bonds  of  the  United  States.  (Rev.  Stat.  U.  S. 
Sec.  5158.) 


79 

§  58.  ITnited  States  Bonds  to  be  Deposited. — Every  association, 
after  having  complied  with  the  provisions  of  this  Title,  prelimin- 
ary to  the  commencement  of  the  banking  business,  and  before  it 
shall  be  authorized  to  commence  banking  business  under  this  Title, 
shall  transfer  and  deliver  to  the  Treasurer  of  the  United  States 
any  United  States  registered  bonds,  bearing  interest,  to  an  amount 
not  less  than  thirty  thousand  dollars  and  not  less  than  one-third  of 
the  capital  stock  paid  in.  Such  bonds  shall  be  received  by  the 
Treasurer  upon  deposit,  and  shall  be  by  him  safely  kept  in  his 
office,  until  they  shall  be  otherwise  disposed  of,  in  pursuance  of 
the  provisions  of  this  Title.     (Kev.  Stat.  U.  S.  Sec.  5159.) 

Amended  as  to  amount  of  bonds  to  be  deposited.    See  next  section. 

§  59.  Amount  of  Bonds  to  be  Deposited. — That  National  banks 
now  organized,  or  hereafter  organized,  having  a  capital  of  one 
hundred  and  fifty  thousand  dollars  or  less,  shall  not  be  required  to 
keep  on  deposit,  or  deposit  with  the  Treasurer  of  the  United 
States,  United  States  bonds  in  excess  of  one-fourth  of  their  capital 
stock  as  security  for  their  circulating  notes;  but  such  banks  shall 
keep  on  deposit,  or  deposit  with  the  Treasurer  of  the  United  States, 
the  amount  of  bonds  as  herein  required;  and  such  of  those  banks 
having  on  deposit  bonds  in  excess  of  that  amount  are  authorized 
to  reduce  their  circulation  by  the  deposit  of  lawful  money,  as 
provided  by  law.  (Act  July  12,  1882,  Ch.  290,  Sec.  8;  22  Stat. 
U.  S.  164.) 

As  to  the  amount  of  bonds  required  to  be  deposited  by  banks  with  a 
capital  in  excess  of  $150,000.     See  section  88. 

§  60.  Increase  and  Decrease  of  Capital  and  Bonds. — The  de- 
posits of  bonds  made  by  each  association  shall  be  increased  as  its 
capital  may  be  paid  up  or  increased,  so  that  every  association  shall 
at  all  times  have  on  deposit  with  the  Treasurer  registered  United 
States  bonds  to  the  amount  of  at  least  one-third  of  its  capital 
stock  actually  paid  in.  And  any  association  that  may  desire  to 
reduce  its  capital  or  close  up  its  business  and  dissolve  its  organiza- 
tion may  take  up  its  bonds  upon  returning  to  the  Comptroller  its 
circulating  notes  in  the  proportion  hereinafter  required,  or  may 
take  up  any  excess  of  bonds  beyond  one-third  of  its  capital  stock, 


80 

and  upon  which  no  circulating  notes  have  been  delivered.     (Eev. 
Stat.  U.  S.  Sec.  5160.) 

Later  laws  having  changed  the  limit  of  bonds  (see  section  59  and 
note)  the  limits  prescribed  in  these  later  laws  must  be  observed  in  in- 
creasing or  reducing  capital  stock.  Banks,  however,  may  still  return 
circulation  under  this  section,  and  take  up  excess  of  bonds  above  legal 
limit  on  which  no  circulating  notes  have  been  delivered. 

§  61.  Exchange  of  Coupon  Bonds. — To  facilitate  a  compliance 
with  the  two  preceding  sections,  the  Secretary  of  the  Treasury  is 
authorized  to  receive  from  any  association,  and  cancel,  any  United 
States  coupon  bonds,  and  to  issue  in  lieu  thereof  registered  bonds  of 
like  amount,  bearing  a  like  rate  of  interest  and  having  the  same 
time  to  nm.     (Eev.  Stat.  TJ.  S.  Sec.  5161.) 

Coupon  bonds,  as  well  as  registered  bonds  properly  transferred,  are 
usually  sent  to  the  office  of  the  Comptroller  of  the  Currency  by  regis- 
tered mail  or  express,  and  the  bond  clerk  in  that  office  takes  the  neces- 
sary steps  to  convert  the  coupon  bonds  into  registered,  and  to  turn  over 
the  bonds  in  due  course  to  the  custody  of  the  Treasurer  of  the  United 
States  in  trust  for  the  bank. 

§  62.  Issue  of  Two  Per  Cent.  Bonds  Authorized — ^Deposit  of  as 
Security  for  Circulating  Notes. — That  the  Secretary  of  the  Treas- 
ury is  hereby  authorized  to  receive  at  the  Treasury  any  of  the 
outstanding  bonds  of  the  United  States  bearing  interest  at  five 
per  centum  per  annum,  payable  February  first,  nineteen  hundred 
and  four,  and  any  bonds  of  the  United  States  bearing  interest  at 
four  per  centum  per  annum,  payable  July  first,  nineteen  hundred 
and  seven,  and  any  bonds  of  the  United  States  bearing  interest  at 
three  per  centum  per  annum,  payable  August  first,  nineteen  hundred 
and  eight,  and  to  issue  in  exchange  therefor  an  equal  amount  of 
coupon  or  registered  bonds  of  the  United  States  in  such  form  as 
he  may  prescribe,  in  denominations  of  fifty  dollars  or  any  multi- 
ple thereof,  bearing  interest  at  the  rate  of  two  per  centum  per 
annum,  payable  quarterly,  such  bonds  to  be  payable  at  the 
pleasure  of  the  United  States  after  thirty  years  from  the  date  of 
their  issue,  and  said  bonds  to  be  payable,  principal  and  interest, 
in  gold  coin  of  the  present  standard  value,  and  to  be  exempt  from 
the  payment  of  all  taxes  or  duties  of  the  United  States,  as  well  as 


81 

from  taxation  in  any  form  by  or  under  State,  municipal,  or  local 
authority:  Provided,  That  such  outstanding  bonds  may  be  re- 
ceived in  exchange  at  a  valuation  not  greater  than  their  present 
worth  to  yield  an  income  of  two  and  one-quarter  per  centum  per 
annum;  and  in  consideration  of  the  reduction  of  interest  effected, 
the  Secretary  of  the  Treasury  is  authorized  to  pay  to  the  holders  of 
the  outstanding  bonds  surrendered  for  exchange,  out  of  any  money 
in  the  Treasury  not  otherwise  appropriated,  a  sum  not  greater  than 
the  difference  between  their  present  worth,  computed  as  afore- 
said, and  their  par  value,  and  the  payments  to  be  made  hereunder 
shall  be  held  to  be  payments  on  account  of  the  sinking  fund  created 
by  section  thirty-six  hundred  and  ninety-four  of  the  Kevised 
Statutes:  And  provided  further,  That  the  two  per  centum  bonds 
to  be  issued  under  the  provisions  of  this  Act  shall  be  issued  at 
not  less  than  par,  and  they  shall  be  numbered  consecutively  in 
the  order  of  their  issue,  and  when  payment  is  made  the  last  numbers 
issued  shall  be  first  paid,  and  this  order  shall  be  followed  until  all 
the  bonds  are  paid;  and  whenever  any  of  the  outstanding  bonds 
are  called  for  pa3rment,  interest  thereon  shall  cease  three  months 
after  such  call ;  and  there  is  hereby  appropriated  out  of  any  money 
in  the  Treasury  not  otherwise  appropriated,  to  effect  the  exchanges 
of  bonds  provided  for  in  this  Act,  a  sum  not  exceeding  one- 
fifteenth  of  one  per  centum  of  the  face  value  of  said  bonds,  to 
pay  the  expense  of  preparing  and  issuing  the  same  and  other 
expenses  incident  thereto.  (Act  March  14,  1900,  Ch.  41,  Sec. 
11;  31  Stat.  U.  S.  48.) 

§  63.  Transfer  of  Bonds  to  and  by  Treasurer. — All  transfers  of 
United  States  bonds  made  by  any  association  under  the  provisions 
of  this  Title  shall  be  made  to  the  Treasurer  of  the  United  States 
'  in  trust  for  the  association,  with  a  memorandum  written  or  printed 
on  each  bond,  and  signed  by  the  cashier  or  some  other  officer  of  the 
association  making  the  deposit.  A  receipt  shall  be  given  to  the  as- 
sociation by  the  Comptroller  of  the  Currency,  or  by  a  clerk  ap- 
pointed by  him  for  that  purpose,  stating  that  the  bond  is  held  in 
trust  for  the  association  on  whose  behalf  the  transfer  is  made,  and 
as  security  for  the  redemption  and  payment  of  any  circulating 
notes  that  have  been  or  may  be  delivered  to  such  association.  No 
assignment  or  transfer  of  any  such  bond  by  the  Treasurer  shall 


82 

be  deemed  valid  unless  countersigned  by  the  Comptroller  of  the 
Currency.     (Eev.  Stat.  U.  S.  Sec.  5162.) 

Deposit  of  Bonds. — The  bonds  when  sent  to  the  Comptroller  should 
bear  the  memorandum,  written  or  printed,  that  they  are  transferred  to 
the  Treasurer  in  trust  for  the  association,  and  be  signed  by  the  cashier. 
A  receipt  is  given  by  the  Comptroller  of  the  Currency,  and  when  the 
bonds  are  placed  in  the  custody  of  the  Treasurer,  a  receipt  is  given  in 
duplicate  by  that  oflacer— one  is  sent  to  the  bank  and  the  other  to  the 
Comptroller  of  the  Currency. 

WiTHDBAWAL  OF  BoNDS. — The  Comptroller  and  Treasurer  will  not  per- 
mit the  withdrawal  and  transfer  of  bonds  from  the  Treasurer  except 
upon  authority  given  by  the  board  of  directors  to  transfer  the  same 
to  the  designated  transferee.  (See  form  of  resolution,  page  323.) 
When  bonds  are  to  be  withdrawn,  the  Treasurer's  duplicate  receipt 
held  by  the  bank  must  be  sent  to  the  Comptroller  with  the  directors' 
resolution.  Care  should  be  taken  to  file  this  receipt  where  it  can 
readily  be  found.  When  it  cannot  be  found  the  Treasurer  requires 
before  bonds  can  be  withdrawn,  an  affidavit  to  that  effect,  and  that 
if  found  it  will  be  sent  to  him. 

§  64.  Eegistry  of  Bond  Transfers. — The  Comptroller  of  the 
Currency  shall  keep  in  his  office  a  book,  in  which  he  shall  cause  to 
be  entered,  immediately  upon  countersigning  it,  every  transfer  or 
assignment  by  the  treasurer  of  any  bonds  belonging  to  a  National 
banking  association  presented  for  his  signature.  He  shall  state  in 
such  entry  the  name  of  the  association  from  whose  account  the 
transfer  is  made,  the  name  of  the  party  to  whom  it  is  made,  and 
the  par  value  of  the  bonds  transferred.  (Rev.  Stat.  U.  S.  Sec. 
5163.) 

Bonds  received  in  the  Comptroller's  office  are  first  receipted  for  to  the 
express  company  or  post  office,  and  are  then  entered  in  the  books  of  the 
office.  The  subsequent  history  of  each  bond  can  thus  be  accurately 
traced. 

§  65.  Association  to  be  Advised  of  Transfers. — The  Comptroller 
of  the  Currency  shall,  immediately  upon  countersigning  and  enter- 
ing any  transfer  or  assignment  by  the  Treasurer  of  any  bonds  be- 
longing to  a  National  banking  association,  advise  by  mail  the 
association  from  whose  accounts  the  transfer  is  made  of  the  kind 
and  numerical  designation  of  the  bonds  and  the  amount  thereof 
BO  transferred.     (Rev,  Stat.  U.  S.  Sec.  5164.) 


83 

Advice  to  the  bank  Is  required  as  an  additional  precaution  against 
erroneous  or  fraudulent  transfers  from  its  account  in  trust. 

§  66.  Comptroller  and  Treasurer  to  Have  Access  to  Books. — The 

Comptroller  of  the  Currency  shall  have  at  all  times,  during  office 
hours,  access  to  the  books  of  the  Treasurer  of  the  United  States  for 
the  purpose  of  ascertaining  the  correctness  of  any  transfer  or  as- 
signment of  the  bonds  deposited  by  an  association,  presented  to  the 
Comptroller  to  countersign;  and  the  Treasurer  shall  have  the  like 
access  to  the  book  mentioned  in  section  fifty-one  hundred  and  sixty- 
three,  during  office  hours,  to  ascertain  the  correctness  of  the  entries 
in  the  same ;  and  the  Comptroller  shall  also  at  all  times  have  access 
to  the  bonds  on  deposit  with  the  Treasurer  to  ascertain  their  amount 
and  condition.     (Eev.  Stat.  U.  S.  Sec.  5165.) 

This  section  prescribes  further  check?  on  mistakes  or  frauds. 

§  67.  Annual  Examination  of  Bonds. — Every  association  having 
bonds  deposited  in  the  office  of  the  Treasury  of  the  United  States 
shall,  once  or  oftener  in  each  fiscal  year,  examine  and  compare  the 
bonds  pledged  by  the  association  with  the  books  of  the  Comptroller 
of  the  Currency  and  with  the  accounts  of  the  association,  and,  if 
they  are  found  correct,  to  execute  to  the  Treasurer  a  certificate 
setting  forth  the  different  kinds  and  the  amounts  thereof,  and  that 
the  same  are  in  the  possession  and  custody  of  the  Treasurer  at  the 
date  of  the  certificate.  Such  examination  shall  be  made  at  such 
a  time  or  times  during  the  ordinary  business  hours  as  the  Treasurer 
and  the  Comptroller,  respectively,  may  select,  and  may  be  made  by 
an  officer  or  agent  of  siuch  association  duly  appointed  in  writing  for 
that  purpose;  and  his  certificate  before  mentioned  shall  be  of  like 
force  and  validity  as  if  executed  by  the  president  or  cashier.  A 
duplicate  of  such  certificate,  signed  by  the  Treasurer,  shall  be  re- 
tained by  the  association.     (Rev.  Stat.  U.  S.  Sec.  5166.) 

This  section  throws  upon  the  association  the  direct  responsibility  of 
ascertaining  the  safety  and  actual  presence  on  deposit  of  the  bonds  held 
In  trust  for  it  by  the  Treasurer.  The  examination  is  usually  made  by 
the  bank's  accredited  agent. 


84 

§  68.  Bonds  to  be  Held  as  Security  for  Circulation — Interest  on — 
Depreciation — ^Exchange  of  Bonds. — The  bonds  transferred  to  and 
deposited  with  the  Treasurer  of  the  United  States  by  any  association, 
for  the  security  of  its  circulating  notes,  shall  be  held  exclusively  for 
that  purpose  until  such  notes  are  redeemed,  except  as  provided  in 
this  Title.  The  Comptroller  of  the  Currency  shall  give  to  any 
such  association  powers  of  attorney  to  receive  and  appropriate  to 
its  own  use  the  interest  on  the  bonds  which  it  has  so  transferred 
to  the  Treasurer;  but  such  power  shall  become  inoperative  when- 
ever such  association  fails  to  redeem  its  ciitjulating  notes.  When- 
ever the  market  or  cash  value  of  any  bonds  thus  deposited  with  the 
Treasurer  is  reduced  below  the  amount  of  the  circulation  issued  for 
the  same,  the  Comptroller  may  demand  and  receive  the  amount  of 
such  depreciation  in  other  United  States  bonds  at  cash  value,  or  in 
money,  from  the  association,  to  be  deposited  with  the  Treasurer  as 
long  as  such  depreciation  continues.  And  the  Comptroller,  upon 
the  terms  prescribed  by  the  Secretary  of  the  Treasury,  may  per- 
mit an  exchange  to  be  made  of  any  of  the  bonds  deposited  with  the 
Treasurer  by  any  associations  for  other  bonds  of  the  United  States 
authorized  to  be  received  as  security  for  circulating  notes,  if  he 
is  of  opinion  that  such  an  exchange  can  be  made  without  prejudice 
to  the  United  States;  and  he  may  direct  the  return  of  any  bonds 
to  the  association  which  transferred  the  same,  in  sums  of  not  less 
than  one  thousand  dollars,  upon  the  surrender  to  him  and  the  can- 
cellation of  a  proportionate  amount  of  such  circulating  notes: 
Provided,  That  the  remaining  bonds  which  shall  have  been  trans- 
ferred by  the  association  offering  to  surrender  circulating  notes  are 
equal  to  the  amount  required  for  the  circulating  notes  not  surren- 
dered by  such  association,  and  that  the  amount  of  bonds  in  the 
hands  of  the  Treasurer  is  not  diminished  below  the  amount  re- 
quired to  be  kept  on  deposit  with  him,  and  that  there  has  been  no 
failure  by  the  association  to  redeem  its  circulating  notes,  nor  any 
other  violation  by  it  of  the  provisions  of  this  Title,  and  that  the 
market  or  cash  value  of  the  remaining  bonds  is  not  below  the 
amount  required  for  the  circulation  issued  for  the  same.  (Kev. 
Stat.  U.  S.  Sec.  5167.) 

Inteeest  on  Bonds. — ^For  the  method  of  obtaining  the  interest  on 
these  bonds  see  page  339.      This  interest  may  be  retained  in  certain 


85 

cases:  1st,  as  mentioned  in  this  section,  for  failure  to  redeem  circulat- 
ing notes;  2d,  for  failure  to  make  reports  (see  p.  128);  3d,  for  failure 
to  pay  taxes  (see  p.  134.) 

United  States  Bonds  on  Deposit. — If  worth  less  in  the  market  than 
the  circulation  secured  by  the  same,  the  bank  can  be  required  to  make 
the  security  equal  to  the  face  value  of  its  notes  in  circulation.  This 
may  be  done  on  approval  of  the  Comptroller  by  a  deposit  of  lawful 
money  to  cover  the  depreciation  or  by  a  temporary  deposit  of  additional 
U.  S.  bonds  while  the  depreciation  continues,  or  by  substituting  for  the 
depreciated  bonds  other  U.  S.  bonds  of  value  satisfactory  to  the  Comp- 
troller, or  by  reducing  the  circulation  of  the  bank. 

§  69.  Delivery  of  Circulation  to  Associations — ^Amonnt  of — ^De- 
nominations.— That  upon  the  deposit  with  the  Treasurer  of  the 
United  States,  by  any  National  banking  association,  of  any  bonds 
of  the  United  States  in  ihe  manner  provided  by  existing  law,  such 
association  shall  be  entitled  to  receive  from  the  Comptroller  of  the 
Currency  circulating  notes  in  blank,  registered  and  countersigned 
as  provided  by  law,  equal  in  amount  to  the  par  value  of  the  bonds  so 
deposited;  and  any  National  banking  association  now  having  bonds 
on  deposit  for  the  security  of  circulating  notes,  and  upon  which 
an  amount  of  circulating  notes  has  been  issued  less  than  the  par 
value  of  the  bonds,  shall  be  entitled,  upon  due  application  to  the 
Comptroller  of  the  Currency,  to  receive  additional  circulating  notes 
in  blank  to  an  amount  which  will  increase  the  circulating  notes 
held  by  such  association  to  the  par  value  of  the  bonds  deposited, 
such  additional  notes  to  be  held  and  treated  in  the  same  way  as  cir- 
culating notes  of  National  banking  associations  heretofore  issued, 
and  subject  to  all  the  provisions  of  law  affecting  such  notes :  Pro- 
vided, That  nothing  herein  contained  shall  be  construed  to  modify 
or  repeal  the  provisions  of  section  fifty-one  hundred  and  sixty- 
seven  of  the  Kevised  Statutes  of  the  United  States,  authorizing 
the  Comptroller  of  the  Currency  to  require  additional  deposits  of 
bonds  or  of  lawful  money  in  case  the  market  value  of  the  bonds 
held  to  secure  the  circulating  notes  shall  fall  below  the  par  value 
of  the  circulating  notes  outstanding  for  which  such  bonds  may  be 
deposited  as  security :  And  provided  further.  That  the  circulating 
notes  furnished  to  National  banking  associations  under  the  pro- 
visions of  this  Act  shall  be  of  the  denominations  prescribed  by  law, 
except  that  no  National  banking  association  shall,  after  the  passage 


86 

of  this  Act,  be  entitled  to  receive  from  the  Comptroller  of  the 
Currency,  or  to  issue  or  reissue  or  place  in  circulation,  more  than 
one-third  in  amount  of  its  circulating  notes  of  the  denomination  of 
five  dollars :  And  provided  further.  That  the  total  amount  of  such 
notes  issued  to  any  such  association  may  equal  at  any  time  but 
shall  not  exceed  the  amount  at  such  time  of  its  capital  stock 
actually  paid  in:  And  provided  further.  That  under  regulations 
to  be  prescribed  by  the  Secretary  of  the  Treasury  any  National 
banking  association  may  substitute  the  two  per  centum  bonds  issued 
under  the  provisions  of  this  Act  for  any  of  the  bonds  deposited 
with  the  Treasurer  to  secure  circulation  or  to  secure  deposits  of 
public  money;  and  so  much  of  an  Act  entitled  "An  Act  to  enable 
National  banking  associations  to*  extend  their  corporate  existence, 
and  for  other  purposes,"  approved  July  twelfth,  eighteen  hundred 
and  eighty-two,  as  prohibits  any  National  bank  which  makes  any 
deposit  of  lawful  money  in  order  to  withdraw  its  circulating  notes 
from  receiving  any  increase  of  its  circulation  for  the  period  of  six 
months  from  the  time  it  made  such  deposit  of  lawful  money  for 
the  purpose  aforesaid,  is  hereby  repealed,  and  all  other  Acts  or 
parts  of  Acts  inconsistent  with  the  provisions  of  this  section  are 
hereby  repealed.  (Act  March  14,  1900,  Ch.  41,  Sec.  12;  31  Stat. 
U.  S.  49.) 

§  70.  Printing  of  Circulating  Notes,  Denominations,  etc. — In 

order  to  furnish  suitable  notes  for  circulation,  the  Comptroller  of 
the  Currency  shall,  under  the  direction  of  the  Secretary  of  the 
Treasury,  cause  plates  and  dies  to  be  engraved  in  the  best  manner 
to  guard  against  counterfeiting  and  fraudulent  alterations,  and 
shall  have  printed  therefrom,  and  numbered,  such  quantity  of 
circulating  notes,  in  blank,  of  the  denominations  of  one  dollar, 
two  dollars,  three  dollars,  five  dollars,  ten  dollars,  twenty  dollars, 
fifty  dollars,  one  hundred  dollars,  five  hundred  dollars,  one  thousand 
dollars,  as  may  be  required  to  supply  the  associations  entitled  to 
receive  the  same.  Such  notes  shall  express  upon  their  face  that 
they  are  secured  by  United  States  bonds,  deposited  with  the  Treas- 
urer of  the  United  States,  by  the  written  or  engraved  signatures  of 
the  Treasurer  and  Eegister,  and  by  the  imprint  of  the  seal  of 
the  Treasury;  and  shall  also  express  upon  their  face  the  promise 
of  the  association  receiving  the  same  to  pay  on  demand,  attested 


87 

by  the  signatures  of  the  president  or  vice-president  and  cashier; 
and  shall  bear  such  devices  and  such  other  statements,  and  shall 
be  in  such  form,  as  the  Secretary  of  the  Treasury  shall,  by  regula- 
tion, direct.     (Eev.  Stat.  U.  S.  Sec.  5172.) 

§  71.  Plates  and  Dies — Expenses  of  Burean. — The  plates  and 
special  dies  to  be  procured  by  the  Comptroller  of  the  Currency  for 
the  printing  of  such  circulating  notes  shall  remain  under  his  con- 
trol and  direction,  and  the  expenses  necessarily  incurred  in  execut- 
ing the  laws  respecting  the  procuring  of  such  notes,  and  all  other 
expenses  of  the  Bureau  of  the  Currency,  shall  be  paid  out  of  the 
proceeds  of  the  taxes  or  duties  assessed  and  collected  on  the  circu- 
lation of  National  banking  associations  under  this  Title.  (Eev. 
Stat.  U.  S.  Sec.  5173.) 

§  72.  Charter  Number  of  Bank  to  be  Printed  on  its  Notes. — > 
That  the  Comptroller  of  the  Currency  shall,  under  such  rules  and 
regulations  as  the  Secretary  of  the  Treasury  may  prescribe,  cause 
the  charter  numbers  of  the  association  to  be  printed  upon  all 
National  bank  notes  which  may  be  hereafter  issued  by  him.  (Act 
June  20,  1874,  Ch.  343,  Sec.  5;  18  Stat.  U.  S.  124.) 

§  73.  Annual  Examination  of  Plates,  Dies,  etc. — The  Comp- 
troller of  the  Currency  shall  cause  to  be  examined,  each  year,  the 
plates,  dies,  but-pieces  [bed-pieces],  and  other  material  from 
which  the  National  bank  circulation  is  printed,  in  whole  or  in 
part,  and  file  in  his  office  annually  a  correct  list  of  the  same.  Such 
material  as  shall  have  been  used  in  the  printing  of  the  notes  of 
associations  which  are  in  liquidation,  or  have  closed  business,  shall 
be  destroyed  under  such  regulations  as  shall  be  prescribed  by  the 
Comptroller  of  the  Currency  and  approved  by  the  Secretary  of  the 
Treasury.  The  expenses  of  any  such  examination  or  destruction 
shall  be  paid  out  of  any  appropriation  made  by  Congress  for  the 
s.pecial  examination  of  National  banks  and  bank-note  plates. 
(Rev.  Stat.  U.  S.  Sec.  5174.) 

§  74.  Issue  of  Small  Notes  Limited. — Not  more  than  one-sixth 

part  of  the  notes  furnished  to  any  association  shall  be  of  a  less 

denomination  than  five  dollars.    After  specie  payments  are  re- 
8 


88 

Bumed  no  association  shall  be  furnished  with  notes  of  a  less  de- 
nomination than  five  dollars.     (Eev.  Stat.  U.  S.  Sec.  5175.) 

§  75.  Repeal  of  Limit  of  Circulation,  etc. — That  section  five 
thousand  one  hundred  and  seventy-seven  of  the  Revised  Statutes, 
limiting  the  aggregate  amount  of  circulating  notes  of  National 
banking  associations,  be,  and  is  hereby,  repealed;  and  each  exist- 
ing banking  association  may  increase  its  circulating  notes  in 
accordance  with  existing  law  without  respect  to  said  aggregate 
limit;  and  new  banking  asssociations  may  be  organized  in  ac- 
cordance with  existing  law  without  respect  to  said  aggregate 
limit;  and  the  provisions  of  law  for  the  withdrawal  and  redis- 
tribution of  National  bank  currency  among  the  several  States 
and  Territories  are  hereby  repealed.  (Act  Jan.  14,  1875,  Ch. 
15,  Sec.  3;  18  Statu.  S.  296.) 

§  76.  Limit  of  Circnlation  of  Gold  Banks  Kepealed. — ^That  so 
much  of  section  five  thousand  one  hundred  and  eighty-five  of  the 
Revised  Statutes  of  the  United  States  as  limits  the  circulation  of 
banking  associations,  organized  for  the  purpose  of  issuing  notes 
payable  in  gold,  severally  to  one  million  dollars,  be,  and  the  same 
is  hereby,  repealed;  and  each  of  such  existing  banking  associations 
may  increase  its  circulating  notes,  and  new  banking  associations 
may  be  organized,  in  accordance  with  existing  law,  without  respect 
to  such  limitation.     (Act  Jan.  19,  1875,  Ch.  19;  18  Stat.  302.) 

There  are  at  present  no  gold  banks. 

§  77.  Circulating  Notes:  for  What  Receivable. — After  any  as- 
sociation receiving  circulating  notes  under  this  Title  has  caused 
its  promise  to  pay  such  notes  on  demand  to  be  signed  by  the  presi- 
dent or  vice-president  and  cashier  thereof,  in  such  manner  as  to 
make  them  obligatory  promissory  notes,  payable  on  demand,  at  its 
place  of  business,  such  association  may  issue  and  circulate  the  same 
as  money.  And  the  same  shall  be  received  at  par  in  all  parts  of 
the  United  States  in  pajrment  of  taxes,  excises,  public  lands,  and 
all  other  dues  to  the  United  States,  except  duties  on  imports;  and 
also  for  all  salaries  and  other  debts  and  demands  owing  by  the 
United  States  to  individuals,  corporations,  and  associations  within 
the  United  States,  except  interest  on  the  public  debt,  and  in  re- 
demption of  the  National  currency.     (Rev.  Stat.  U.  S.  Sec.  5182.) 


89 

Signing  Cieculating  Notes. — Stamped  signatures  affixed  by  the  offi- 
cers themselves  would  be  sufficient  to  make  the  notes  "  obligatory  pro- 
missory notes,"  and  probably  printed  or  engraved  signatures  would  also 
suffice  for  this  purpose.  But  Congress  probably  had  in  view  the  usual 
manner  in  which  promissory  notes  are  signed;  that  is,  by  the  manual 
signature  of  the  maimer,  and  intended  that  the  notes  of  the  banks  should 
be  signed  in  this  way.  There  appears,  however,  to  be  no  penalty  for  hav- 
ing printed  signatures  rather  than  written  ones,  as  the  Comptroller  has 
in  some  of  his  reports  recommended  a  law  imposing  a  penalty. 

See  note  to  next  section. 

§  78.  Bank  Liable  Though  Notes  Not  Signed  or  Signatures 
Forged. — That  the  provisions  of  the  Revised  Statutes  of  the 
United  States,  providing  for  the  redemption  of  National  bank 
notes,  shall  apply  to  all  National  bank  notes  that  have  been  or  may 
be  issued  to,  or  received  by,  any  National  bank,  notwithstanding 
such  notes  may  have  been  lost  or  stolen  from  the  bank  and  put  in 
circulation  without  the  signature  or  upon  the  forged  signature  of 
the  president  or  vice-president  and  cashier.  (Act  July  28,  1892, 
Ch.  317;  28  Stat.  U.  S.  322.) 

National  banks  being  required  by  the  provisions  of  this  act  to  redeem 
circulating  notes  issued  to  them,  though  lost  or  stolen  from  the  bank 
unsigned,  the  matter  of  signatures  of  officers  is  evidently  not  im- 
portant, and  in  view  of  this  fact  many  banks  have  the  signatures  of 
their  officers  engraved  or  stamped  on  the  notes,  and  they  are  frequently 
ordered  sent  direct  from  Washington  to  the  Reserve  Agent  of  the  bank 
for  credit,  arrangement  having  been  made  with  the  correspondent  to 
have  signatures  of  officers  printed  on  notes. 

§  79.  Issue  of  other  Notes  Prohibited. — No  National  banking 
association  shall  issue  post-notes  or  any  other  notes  to  circulate  as 
money  than  such  as  are  authorized  by  the  provisions  of  this  Title. 
(Rev.  Stat.  U.  S.  Sec.  5183.) 

Applies  to  Cibculatinq  Notes. — In  the  revision  of  the  United  States 
Statutes  the  words  "  post-notes  "  were  omitted,  but  were  afterward  put 
back  by  the  act  of  February  18,  1875.  This  section  applies  only 
where  the  instruments  are  issued  to  "  circulate  as  money,"  and  where 
this  is  not  the  purpose  they  are  not  within  the  prohibition.  (Hunt,  Appel- 
lant, 141  Mass.,  515;  Riddle  v.  First  National  Bank,  27  Fed.  Rep.,  503.) 
Thus,  it  has  been  held,  that  this  section  does  not  forbid  the  issue  of  cer- 
tificates of  deposit.  ( See  cases  cited  above. )  Nor  does  it  forbid  the  certifi- 
cation of  checks,  although  the  purpose  of  a  certification,  by  making  the 


90 

check  primarily  the  obligation  of  the  bank,  is  to  give  It  currency  so  that 
it  may  pass  freely  from  hand  to  hand.  (See  Merchants'  National  Bank 
V.  State  National  Bank,  10  Wallace,  604.)  The  use  of  the  term  "  post- 
notes  "  appears  to  have  been  the  cause  of  some  misapprehension  as  to  the 
meaning  of  this  section.  Doubtless  many  obligations  issued  by  National 
banks  for  money  borrowed  do  come  within  the  definition  of  a  post-note, 
but  the  term  is  to  be  taken  in  connection  with  the  words  "  to  circulate 
as  money,"  which  limit  the  prohibition  to  post-notes  issued  for  that 
purpose. 

§  80.  Destroying  and  Replacing  Mutilated  Notes. — It  shall  be 
the  duty  of  the  Comptroller  of  the  Currency  to  receive  worn-out  or 
mutilated  circulating  notes  issued  by  any  banking  association,  and 
also,  on  due  proof  of  the  destruction  of  any  such  circulating  notes, 
to  deliver  in  place  thereof  to  the  association  other  blank  circulating 
notes  to  an  equal  amount.  Such  worn-out  or  mutilated  notes, 
after  a  memorandum  has  been  entered  in  the  proper  books,  in  ac- 
cordance with  such  regulations  as  may  be  established  by  the  Comp- 
troller, as  well  as  all  circulating  notes  which  shall  have  been  paid 
or  surrendered  to  be  cancelled,  shall  be  burned*  to  ashes  in  presence 
of  four  persons,  one  to  be  appointed  by  the  Secretary  of  the 
Treasury,  one  by  the  Comptroller  of  the  Currency,  one  by  the 
Treasurer  of  the  United  States,  and  one  by  the  association,  under 
such  regulations  as  the  Secretary  of  the  Treasury  may  prescribe. 
A  certificate  of  such  burning,  signed  by  the  parties  so  appointed, 
shall  be  made  in  the  books  of  the  Comptroller,  and  a  duplicate 
thereof  forwarded  to  the  association  whose  notes  are  thus  cancelled. 
(Eev.  Stat.  U.  S.  Sec.  5184.) 

§  81.  National  Gold  Banks. — Associations  may  be  organized  in 
the  manner  prescribed  by  this  Title  for  the  purpose  of  issuing 
notes  payable  in  gold;  and  upon  the  deposit  of  any  United  States 
bonds  bearing  interest  payable  in  gold  with  the  Treasurer  of  the 
United  States,  in  the  manner  prescribed  for  other  associations,  it 
shall  be  lawful  for  the  Comptroller  of  the  Currency  to  issue  to 
the  association  making  the  deposit  circulating  notes  of  different 
denominations,  but  none  of  them  of  less  than  five  dollars,  and  not 
exceeding  in  amount  eighty  per  centum  of  the  par  value  of  the 
bonds  deposited,  which  shall  express  the  promise  of  the  association 

*  See  Section  104,  which  provides  for  destruction  by  maceration. 


91 

to  pay  them,  upon  presentation  at  the  ofiQce  at  which  they  are 
issued,  in  gold  coin  of  the  United  States,  and  shall  be  so  re- 
deemable. But  no  such  association  shall  have  a  circulation  of 
more  than  one  million  of  dollars.     (Rev.  Stat.  U.  S.  Sec.  5185.) 

There  are  now  no  gold  banks  in  existence.  The  resumption  of  specie 
payments  placed  all  National  banks  on  a  gold  basis  and  the  special 
gold  banks  at  a  disadvantage  in  the  issue  of  circulation. 

§  82.  Keserve  Required  of  Gold  Banks. — Every  association  or- 
ganized under  the  preceding  section  shall  at  all  times  keep  on  hand 
not  less  than  twenty-five  per  centum  of  its  outstanding  circula- 
tion, in  gold  or  silver  coin  of  the  United  States ;  and  shall  receive 
at  par  in  the  payment  of  debts  the  gold  notes  of  every  other  such 
association  which  at  the  time  of  such  payment  is  redeeming  its 
circulating  notes  in  gold  coin  of  the  United  States,  and  shall  be 
subject  to  all  the  provisions  of  this  Title :  Provided:,  That,  in  ap- 
plying the  same  to  associations  organized  for  issuing  gold  notes, 
the  terms  "lawful  money"  and  "lawful  money  of  the  United 
States  ^^  shall  be  construed  to  mean  gold  or  silver  coin  of  the 
United  States ;  and  the  circulation  of  such  association  shall  not  be 
within  the  limitation  of  circulation  mentioned  in  this  Title. 
(Eev.  Stat.  U.  S.  Sec.  5186.) 

See  previous  section  and  remarks. 

§  83.  National  Bank  Notes  Not  to  Be  Imitated. — It  shall 
not  be  lawful  to  design,  engrave,  print,  or  in  any  manner  make 
or  execute,  or  to  utter,  issue,  distribute,  circulate,  or  use,  any 
business  or  professional  card,  notice,  placard,  circular,  hand-bill,  or 
advertisement,  in  the  likeness  or  similitude  of  any  circulating  note 
or  other  obligation  or  security  of  any  banking  association  organized 
or  acting  under  the  laws  of  the  United  States  which  has  been  or 
may  be  issued  under  this  Title,  or  any  act  of  Congress,  or  to 
write,  print,  or  otherwise  impress  upon  any  such  note,  obligation, 
or  security  any  business  or  professional  card,  notice,  or  advertise- 
ment, or  any  notice  or  advertisement  of  any  matter  or  thing  what- 
ever. Every  person  who  violates  this  section  shall  be  liable  to  a 
penalty  of  one  hundred  dollars,  recoverable  one-half  to  the  use  of 
the  informer.     (Eev.  Stat.  U.   S.   Sec.  5188.) 


92 

§  84.  Penalty  for  Mutilating  Kotes,  etc. — Every  person  who 
mutilates,  cuts,  defaces,  disfigures,  or  perforates  with  holes,  or 
unites  or  cements  together,  or  does  any  other  thing  to  any  bank-bill, 
draft,  note,  or  other  evidence  of  debt,  issued  by  any  National 
banking  association,  or  who  causes  or  procures  the  same  to  be  done, 
with  intent  to  render  such  bank-bill,  draft,  note,  or  other  evidence 
of  debt  unfit  to  be  re-issued  by  said  association,  shall  be  liable  to  a 
penalty  of  fifty  dollars,  recoverable  by  the  association.  (Eev.  Stat. 
U.  S.  Sec.  5189.) 

§  85.  Bank  to  Eedeem  Its  Notes  at  Its  Counter. — This  section 
shall  not  relieve  any  association  from  its  liability  to  redeem  its 
circulating  notes  at  its  own  counter,  at  par,  in  lawful  money  on 
demand.     (Eev.  Stat.  U.  S.  Sec.  5195.) 

The  other  provisions  of  the  section  required  the  selection  of  banks  in 
certain  cities  as  redemption  agents.  These  provisions  were  repealed  by 
the  act  of  June  30,  1874.     See  next  section. 

§  86.  Redemption  Fund;  Redemption  of  Notes  at  United  States 
Treasury. — That  every  association  organized,  or  to  be  organized, 
under  the  provisions  of  the  said  act,  and  of  the  several  acts  amen- 
datory thereof,  shall  at  all  times  keep  and  have  on  deposit  in  the 
Treasury  of  the  United  States,  in  lawful  money  of  the  United 
States,  a  sum  equal  to  ^Ye  per  centum  of  its  circulation,  to  be 
held  and  used  for  the  redemption  of  such  circulation,  which  sum 
shall  be  counted  as  a  part  of  its  lawful  reserve,  as  provided  in 
section  two  of  this  act;  and  when  the  circulating  notes  of  any  such 
associations,  assorted  or  unassorted,  shall  be  presented  for  re- 
demption, in  sums  of  one  thousand  dollars  or  any  multiple  thereof, 
to  the  Treasurer  of  the  United  States,  the  same  shall  be  redeemed 
in  United  States  notes.  All  notes  so  redeemed  shall  be  charged  by 
the  Treasurer  of  the  United  States  to  the  respective  associations 
issuing  the  same,  and  he  shall  notify  them  severally  on  the  first 
day  of  each  month,  or  oftener,  at  his  discretion,  of  the  amount  of 
such  redemptions;  and  whenever  such  redemptions  for  any  associa- 
tion shall  amount  to  the  sum  of  five  hundred  dollars,  such  asso- 
ciation so  notified  shall  forthwith  deposit  with  the  Treasurer  of 
the  United  States  a  sum  in  United  States  notes  equal  to  the 
amount  of  its  circulating  notes  so  redeemed.    And  all  notes  of 


93 

National  banks,  worn,  defaced,  multilated,  or  otherwise  unfit  for 
circulation,  shall,  when  received  by  any  Assistant  Treasurer,  or  at 
any  designated  depository  of  the  United  States,  be  forwarded  to 
the  Treasurer  of  the  United  States  for  redemption,  as  provided 
herein.  And  when  suck  redemptions  have  been  so  reimbursed,  the 
circulating  notes  so  redeemed  shall  be  forwarded  to  the  respective 
associations  by  which  they  were  issued ;  but  if  any  of  such  notes  are 
worn,  mutilated,  defaced,  or  rendered  otherwiwse  unfit  for  use, 
they  shall  be  forwarded  to  the  Comptroller  of  the  Currency  and 
destroyed,  and  replaced  as  now  provided  by  law.f  *  *  *  And 
provided  further^  That  so  much  of  section  thirty-two  of  said  Na- 
tional Bank  Act  requiring  or  permitting  the  redemption  of 
its  circulating  notes  elsewhere  than  at  its  own  counter,  except  as 
provided  for  in  this  section,  is  hereby  repealed.  (Act  June  20, 
1874,  Ch.  343,  Sec.  3;  18  Stat.  U.  S.  124.) 

The  Five  Per  Cent.  Fund. — This  section  requires,  in  lieu  of  the  re- 
serve on  circulation  abolished  by  the  preceding  section,  a  deposit  equal 
to  five  per  cent,  of  its  circulation  by  each  bank,  in  lawful  money,  with 
the  United  States  Treasurer  for  the  redemption  of  its  circulation.  The 
deposit  so  made  may  be  counted  as  a  part  of  the  bank's  lawful  money 
reserve. 

Redemption  Regulations. — ^When  National  bank  notes  of  one  or  more 
association  are  presented  in  sums  of  $1000,  or  any  multiple  thereof,  the 
Treasurer  is  required  to  redeem  the  same.  He  has  no  authority  in 
law  for  redeeming  a  lot  less  than  $1000,  or  any  lot  unless  it  is  in 
even  thousands.  The  object  of  this  was  undoubtedly  to  avoid  a  multi- 
plicity of  accounts  with  the  outside  public.  The  notes  are  charged  to 
the  respective  associations  issuing  them  until  the  notes  so  redeemed  for 
any  association  amount  to  a  few  hundred  dollars,  when  that  associa- 
tion is  notified  and  required  to  deposit  lawful  money  equal  to  the 
amount  redeemed.  Theoretically,  the  five  per  cent,  redemption  fund  is 
never  touched.  It  remains  intact,  and  this  explains  why  it  can  consist- 
ently be  counted  as  a  part  of  the  lawful  money  reserve  of  a  bank.  When 
a  bank  first  makes  its  five  per  cent,  deposit,  it  receives  a  credit  on  the 
books  of  the  Treasury.  The  cash  goes  into  the  general  fund  and  be- 
comes indistinguishably  mingled  therewith. 

The  Treasury  redeems  the  notes  as  they  come  in,  from  its  own  funds, 
and  in  the  contemplation  of  law  no  charge  is  made  to  the  flve-per-cent. 


tThe  provision  omitted  in  this  place  requires  the  banks  to  reimburse 
the  Treasury  the  expense  incurred.     (See  Sec.  100.) 


94 

account  of  the  bank,  but  from  time  to  time  redemptions  made  are  re- 
ported to  the  bank  and  then  it  is  notified  and  required  to  reimburse  the 
Treasury  for  the  sum  paid  on  its  behalf.  The  requirement  that  Na- 
tional bank  notes  unfit  for  circulation  shall  be  sent  in  by  the  Assistant 
Treasurers  and  designated  depositaries  of  the  United  States  is  in- 
tended to  keep  the  circulation  up  to  a  fair  standard  of  newness  and 
cleanliness.  Notes  redeemed  at  the  Treasury  fit  for  circulation  are 
sent  back  to  the  banks;  unfit  notes  are  destroyed  as  provided  in  Sec- 
tion 5184,  Rev.  Stat.  U^S. 

Leqal  Tender  and  Lawful  Money — ^What  Is. — The  following  state- 
ment concerning  the  legal  tender  properties  of  money  of  the  United 
States  is  based  upon  United  States  Revised  Statutes,  Sections  3585, 
3586,  3587,  3588,  3589  and  3590,  and  the  acts  amendatory  thereof  and 
additional  thereto:  Gold  coin,  standard  silver  dollars,  subsidiary  silver, 
minor  coins.  United  States  notes  and  Treasury  notes  of  1890  have  the 
legal  tender  quality  as  follows :  Gold  coin  is  legal  tender  for  its  nominal 
value  when  not  below  the  limit  of  tolerance  in  weight;  when  below 
that  limit  it  is  legal  tender  in  proportion  to  its  weight;  standard  silver 
dollars  and  Treasury  notes  of  1890  are  legal  tender  for  all  debts,  public 
and  private,  except  where  otherwise  expressly  stipulated  in  the  con- 
tract; subsidiary  silver  is  legal  tender  to  the  extent  of  $10,  minor  coins 
to  the  extent  of  25  cents,  and  United  States  notes  for  all  debts,  public 
and  private,  except  duties  on  imports  and  interest  on  the  public  debt. 
Grold  certificates,  silver  certificates  and  National  bank  notes  are  non- 
legal-tender  money.  Both  kinds  of  certificates,  however,  are  receivable 
for  all  public  dues,  and  National  bank  notes  are  receivable  for  all  public 
dues  except  duties  on  imports,  and  may  be  paid  out  for  all  public  dues, 
except  interest  on  the  public  debt.  The  term  "lawful  money"  is  un- 
derstood to  apply  to  every  form  of  money  which  is  endowed  by  law  with 
the  legal  tender  quality.  (See  Opinions  of  Attorneys-General,  vol.  17, 
p.  123.) 

§  87.  Redemption  Fund  Covered  into  Treasnry. — That  upon 
the  passage  of  this  act  the  halanees  standing  with  the  Treasurer 
of  the  United  States  to  the  respective  credits  of  National  banks 
for  deposits  made  to  redeem  the  circulating  notes  of  such  banks, 
and  all  deposits  thereafter  received  for  like  purpose,  shall  be 
covered  into  the  Treasury  as  a  miscellaneous  receipt,  and  the 
Treasurer  of  the  United  States  shall  redeem  from  the  general 
cash  in  the  Treasury  the  circulating  notes  of  said  banks  which  may 
come  into  his  possession  subject  to  redemption,  and  upon  the 
certificate  of  the  Comptroller  of  the  Currency  that  such  notes  have 
been  received  by  him  and  that  they  have  been  destroyed  and  that 


95 

no  new  notes  will  be  issued  in  their  place,  reimbursement  of  their 
amount  shall  be  made  to  the  Treasurer,  under  such  regulations  as 
the  Secretary  of  the  Treasury  may  prescribe,  from  an  appropriation 
hereby  created,  to  be  known  as  National  bank  notes  Kedemption 
account,  but  the  provisions  of  this  act  shall  not  apply  to  the  de- 
posits received  under  section  three  of  the  Act  of  June  twentieth, 
eighteen  hundred  and  seventy-four,  requiring  every  National  bank 
to  keep  in  lawful  money  with  the  Treasurer  of  the  United  States 
a  sum  equal  to  five  per  centum  of  its  circulation,  to  be  held  and 
used  for  the  redemption  of  its  circulating  notes ;  and  the  balance 
remaining  of  the  deposits  so  covered  shall,  at  the  close  of  each 
month,  be  reported  on  the  monthly  public  debt  statement,  as  debt 
of  the  United  States  bearing  no  interest.  (Act  July  14,  1890, 
Ch.  708,  Sec.  6;  26  Stat.  U.  S.  289.) 

§  88.  Ketiring  Circulation. — ^That  any  association  organized 
under  this  act,  or  any  of  the  acts  of  which  this  is  an  amendment,  de- 
siring to  withdraw  its  circulating  notes,  in  whole  or  in  part,  may, 
upon  the  deposit  of  lawful  money  with  the  Treasurer  of  the  United 
States  in  sums  of  not  less  than  nine  thousand  dollars,  take  up  the 
bonds  which  said  association  has  on  deposit  with  the  Treasurer  for 
the  security  of  such  circulating  notes,  which  bonds  shall  be  assigned 
to  the  bank  in  the  manner  specified  in  the  nineteenth  section  of  the 
National  Bank  Act;  and  the  outstanding  notes  of  said  association, 
to  an  amount  equal  to  the  legal  tender  notes  deposited,  shall  be 
redeemed  at  the  Treasury  of  the  United  States,  and  destroyed  as 
now  provided  by  law:  Provided,  That  the  amount  of  the  bonds 
on  deposit  for  circulation  shall  not  be  reduced  below  fifty  thou- 
sand dollars.  An  association  which  is  in  good  faith  winding  up 
its  business  for  the  purpose  of  consolidating  with  another  associa- 
tion shall  not  be  required  to  deposit  lawful  money  for  its  out- 
standing circulation;  but  its  assets  and  liabilities  shall  be  reported 
by  the  association  with  which  it  is  in  process  of  consolidation. 
(Act  June  20,  1874,  Ch.  343,  Sec.  4;  18  Stat.  U.  S.  124;  Eev. 
Stat.  U.  S.  5223.) 

The  minimum  of  bonds  required  to  be  kept  on  deposit  by  National 
banks,  with  a  capital  of  $150,000  and  less,  was  further  reduced  hy  the 
Act  of  July  12,  1882.     See  Section  59. 


96 

§  89.  Same  Subject. — That  any  National  banking  association 
now  organized,  or  hereafter  organized,  desiring  to  withdraw  its 
circulating  notes,  upon  a  deposit  of  lawful  money  with  the  Treas- 
urer of  the  United  States,  as  provided  in  section  four  of  the  Act 
of  June  twentieth,  eighteen  hundred  and  seventy-four,  entitled 
"An  Act  fixing  the  amount  of  United  States  notes,  providing  for 
a  redistribution  of  National  bank  currency,  and  for  other  purposes," 
or  as  provided  in  this  act,  is  authorized  to  deposit  lawful  money 
and  withdraw  a  proportionate  amount  of  the  bonds  held  as  security 
for  its  circulating  notes  in  the  order  of  such  deposits  *  *  * 
Provided,  That  not  more  than  three  millions  of  dollars  of  lawful 
money  shall  be  deposited  during  any  calendar  month  for  this  pur- 
pose: And  provided  further,  That  the  provisions  of  this  section 
shall  not  apply  to  bonds  called  for  redemption  by  the  Secretary  of 
the  Treasury,  nor  to  the  withdrawal  of  circulating  notes  in  conse- 
quence thereof.  (Act  July  12,  1882,  Ch.  290,  Sec.  9;  22  U.  S. 
Stat.  164.) 

The  provision  omitted  provided  that  "  no  National  bank  which  makes 
any  deposit  of  lawful  money  in  order  to  withdraw  its  circulating  notes 
shall  be  entitled  to  receive  any  increase  of  its  circulation  for  the  period 
of  six  months  from  the  time  it  made  such  deposits  of  lawful  money  for 
the  purpose  aforesaid."  This  was  repealed  by  Act  March  14,  1900.  See 
Section  59. 

§  90.  Circulating  Notes  of  Extended  Banks — Lawful  Money 
Deposit — Expense  of  New  Plates. — That  the  circulating  notes  of 
any  association  so  extending  the  period  of  its  succession,  which  shall 
have  been  issued  to  it  prior  to  such  extension,  shall  be  redeemed  at 
the  Treasury  of  the  United  States,  as  provided  in  section  three  of 
the  Act  of  June  twentieth,  eighteen  hundred  and  seventy-four,  en- 
titled "An  Act  fixing  the  amount  of  United  States  notes,  providing 
for  redistribution  of  National  bank  currency,  and  for  other  pur- 
poses," and  such  notes  when  redeemed  shall  be  forwarded  to  the 
Comptroller  of  the  Currency  and  destroyed,  as  now  provided  by 
law ;  and  at  the  end  of  three  years  from  the  date  of  the  extension 
of  the  corporate  existence  of  each  bank  the  association  so  extended 
shall  deposit  lawful  money  with  the  Treasurer  of  the  United  States 
sufficient  to  redeem  the  remainder  of  the  circulation  which  was 
outstarxfling  at  the  date  of  its  extension,  as  provided  in  sections 


97 

fifty-two  hundred  and  twenty-two,  fifty-two  hundred  and  twenty- 
four,  and  fifty-two  hundred  and  twenty-five  of  the  Revised  Statutes ; 
and  any  gain  that  may  arise  from  the  failure  to  present  such  circu- 
lating notes  for  redemption  shall  inure  to  the  benefit  of  the  United 
States ;  and  from  time  to  time,  as  such  notes  are  redeemed  or  law- 
ful money  deposited  therefor  as  provided  herein,  new  circulating 
notes  shall  be  issued  as  provided  for  by  this  act,  bearing  such  de- 
vices, to  be  approved  by  the  Secretary  of  the  Treasury,  as  shall 
make  them  readily  distinguishable  from  the  circulating  notes  here- 
tofore issued:  Provided,  however.  That  each  banking  association 
which  shall  obtain  the  benefit  of  this  Act  shall  reimburse  to  the 
Treasury  the  cost  of  preparing  the  plate  or  plates  for  such  new  cir- 
culating notes  as  shall  be  issued  to  it.  (Act  July  12^  1882,  Ch.  290, 
Sec.  6;  22  Stat.  U.  S.  162.) 

§  91.  Deposit  to  Redeem  Circulation  of  liquidating  Banks. — 

Within  six  months  from  the  date  of  the  vote  to  go  into  liquidation, 
the  association  shall  deposit  with  the  Treasurer  of  the  United 
States  lawful  money  of  the  United  States  sufficient  to  redeem  all  its 
outstanding  circulation.  The  Treasurer  shall  execute  duplicate 
receipts  for  money  thus  deposited,  and  deliver  one  to  the  associa- 
tion and  the  other  to  the  Comptroller  of  the  Currency,  stating  the 
amount  received  by  him,  and  the  purpose  for  which  it  has  been 
received;  and  the  money  shall  be  paid  into  the  Treasury  of  the 
United  States,  and  placed  to  the  credit  of  such  association  upon 
redemption  account.     (Rev.  Stat.  U.  S.  Sec.  5222.) 

Limit  of  Time. — If  not  otherwise  determined,  the  vote  to  liquidate 
takes  effect  immediately,  and  the  six  months  run  from  that  date;  but 
If  the  vote  itself  is  that  the  liquidation  shall  take  place  at  a  future 
date,  then  that  future  date  is  the  actual  date  on  which  the  vote  takes 
effect,  and  the  six  months  run  therefrom. 

Lawful  Money. — ^Lawful  money  is  United  States  gold  coin,  silver  dol- 
lars or  legal-tender  notes. 

How  Deposit  Made. — The  usual  method  Is  to  make  the  deposit  either 
directly  or  through  a  correspondent  or  agent  with  the  Treasurer  of  the 
United  States  at  Washington,  or  an  Assistant  Treasurer.  When  the  de- 
posit is  made  with  an  Assistant  Treasurer,  he  issues  a  certificate  of  de- 
posit which  is  sent  to  Washington.    When  the  deposit  is  made,  and  the 


98 

bank  has  paid  to  the  United  States  Treasurer  all  amounts  due  for  taxes 
on  circulation  and  all  amounts  due  for  expenses  of  redeeming  notes,  its 
bonds  on  deposit  will  be  surrendered  to  it. 

§  92.  Keassignment  of  Bonds,  Redemption  of  Notes,  etc.,  in 
Sncli  Case. — Whenever  a  sufficient  deposit  of  lawful  money  to  re- 
deem the  outstanding  circulation  of  an  association  proposing  to 
close  its  business  has  been  made^  the  bonds  deposited  by  the  associa- 
tion to  secure  payment  of  its  notes  shall  be  reassigned  to  it  in 
the  manner  prescribed  by  section  fifty-one  hundred  and  sixty-two. 
And  thereafter  the  association  and  its  shareholders  shall  stand  dis- 
charged from  all  liabilities  upon  the  circulating  notes,  and  those 
notes  shall  be  redeemed  at  the  Treasury  of  the  United  States.  And 
if  any  such  bank  shall  fail  to  make  the  deposit  and  take  up  its 
bonds  for  thirty  days  after  the  expiration  of  the  time  specified,  the 
Comptroller  of  the  Currency  shall  have  power  to  sell  the  bonds 
pledged  for  the  circulation  of  said  bank,  at  public  auction  in  New 
York  city,  and  after  providing  for  the  redemption  and  cancella- 
tion of  said  circulation,  and  the  necessary  expenses  of  the  sale,  to 
pay  over  any  balance  remaining  to  the  bank  or  its  legal  representa- 
tive.   (Kev.  Stat.  U.  S.  Sec.  5224.) 

§  93.  Destruction  of  Bedeemed  Notes  of  Liquidating  Bank. — 
Whenever  the  Treasurer  has  redeemed  any  of  the  notes  of  an  asso- 
ciation which  has  commenced  to  close  its  affairs  under  the  six 
[five]  preceding  sections,  he  shall  cause  the  notes  to  be  mutilated 
and  charged  to  the  redemption  account  of  the  association;  and  all 
notes  so  redeemed  by  the  Treasurer  shall,  every  three  months,  be 
certified  to  and  burned  *  in  the  manner  prescribed  in  section  fifty- 
one  hundred  and  eighty-four.     (Eev.  Stat.  U.  S.  5225.) 

§  94.  Mode  of  Protesting  Notes. — Whenever  any  National  bank- 
ing association  fails  to  redeem  in  the  lawful  money  of  the  United 
States  any  of  its  circulating  notes,  upon  demand  of  payment  duly 
.made  during  the  usual  hours  of  business,  at  the  office  of  such  asso- 
ciation, or  at  its  designated  place  of  redemption,  the  holder  may 
cause  the  same  to  be  protested,  in  one  package  by  a  notary  public, 
unless  the  president  or  cashier  of  the  association  whose  notes  are 

♦See  Section  104,  which  provides  that  such  notes  be  destroyed  by- 
maceration. 


99 

presented  for  payment,  or  the  president  or  cashier  of  the  association 
at  the  place  at  which  they  are  redeemable  offers  to  waive  demand 
and  notice  of  the  protest,  and,  in  pursuance  of  such  offer,  makes, 
signs,  and  delivers  to  the  party  making  such  demand  an  admission 
in  writing,  stating  the  time  of  the  demand,  the  amount  demanded, 
and  the  fact  of  the  non-payment  thereof.  The  notary  public,  on 
making  such  protest,  or  upon  receiving  such  admission,  shall  forth- 
with forward  such  admission  or  notice  of  protest  to  the  Comptroller 
of  the  Currency,  retaining  a  copy  thereof.  If,  however,  satisfactory 
proof  is  produced  to  the  notary  public  that  the  payment  of  the  notes 
demanded  is  restrained  by  order  of  any  court  of  competent  jurisdic- 
tion, he  shall  not  protest  the  same.  When  the  holder  of  any  notes 
causes  more  than  one  note  or  package  to  be  protested  on  the  same 
day,  he  shall  not  receive  pay  for  more  than  one  protest.  (Rev. 
Stat.  U.  S.  Sec.  5226.) 

Redemptiox  After  Lawful  Money  Deposit. — It  is,  perhaps,  open  to 
dispute  whether  a  bank,  after  it  has  deposited  lawful  money  to  retire  a 
portion  of  its  circulation  under  the  act  of  June  20,  1874,  is  obliged  to  re- 
deem its  notes  at  its  own  counter  until  the  deposit  of  lawful  money  is 
exhausted  by  presentation  of  notes  at  the  Treasury.  In  other  words,  it 
is  held  by  some  that  while  lawful  money  remains  on  deposit  in  the 
Treasury  the  bank  might  refuse  to  redeem  a  note  presented  at  its  own 
counter,  and  refer  the  presentor  to  the  Treasury.  However  this  may  be, 
while  Section  5226  is  in  force,  a  bank  might  place  itself  in  a  very  dis- 
agreeable position,  and  perhaps  injure  its  credit,  by  refusing  to  redeem 
any  of  its  notes  at  its  own  counter,  that  is,  so  long  as  it  continues  a 
going  bank. 

§  95.  Examination  by  Special  Agent — ^Forfeiture  of  Bonds. — 

On  receiving  notice  that  any  National  banking  association  has 
failed  to  redeem  any  of  its  circulating  notes,  as  specified  in  the  pre- 
ceding section,  the  Comptroller  of  the  Currency,  with  the  con- 
currence of  the  Secretary  of  the  Treasury,  may  appoint  a  special 
agent,  of  whose  appointment  immediate  notice  shall  be  given  to 
such  association,  who  shall  immediately  proceed  to  ascertain 
whether  it  has  refused  to  pay  its  circulating  notes  in  the  lawful 
money  of  the  United  States,  when  demanded,  and  shall  report  to 
the  Comptroller  the  fact  so  ascertained.  If  from  such  protest, 
and  the  report  so  made,  the  Comptroller  is  satisfied  that  such  asso- 
ciation has  refused  to  pay  its  circulating  notes  and  is  in  default,  he 


100 

shall,  within  thirty  days  after  he  has  received  notice  of  such  fail- 
ure, declare  the  bonds  deposited  by  such  association  forfeited  to  the 
United  States,  and  they  shall  thereupon  be  so  forfeited.  (Rev. 
Stat.  U.  S.  Sec.  5227.) 

§  96.  Bank  Not  to  Do  Business  After  Protest  of  Notes. — Aft^r  a 
default  on  the  part  of  an  association  to  pay  any  of  its  circulating 
notes  has  been  ascertained  by  the  Comptroller,  and  notice  thereof 
has  been  given  by  him  to  the  association,  it  shall  not  be  lawful 
for  the  association  suffering  the  same  to  pay  out  any  of  its  notes, 
discount  any  notes  or  bills  or  otherwise  prosecute  the  business  of 
banking,  except  to  receive  and  safely  keep  money  belonging  to  it, 
and  to  deliver  special  deposits.     (Rev.  Stat.  U.  S.  Sec.  5228.) 

§  97.  Redemption  of  Notes  at  Treasnry. — Immediately  upon 
declaring  the  bonds  of  an  association  forfeited  for  non-payment  of 
its  notes,  the  Comptroller  shall  give  notice,  in  such  manner  as  the 
Secretary  of  the  Treasury  shall,  by  general  rules  or  otherwise, 
direct,  to  the  holders  of  the  circulating  notes  of  such  association, 
to  present  them  for  payment  at  the  Treasury  of  the  United  States ; 
and  the  same  shall  be  paid  as  presented  in  lawful  money  of  the 
United  States;  whereupon  the  Comptroller  may,  in  his  discretion, 
cancel  an  amount  of  bonds  pledged  by  such  association  equal  at 
current  market  rates,  not  exceeding  par,  to  the  notes  paid.  (Rev. 
Stat.  U.  S.  Sec.  5229.)     . 

§  98.  Sale  of  Bonds — ^Lien  of  United  States  "Upon  Assets. — 

Whenever  the  Comptroller  has  become  satisfied,  by  the  protest 
or  the  waiver  and  admission  specified  in  section  fifty-two 
hundred  and  twenty-six,  or  by  the  report  provided  for  in  section 
fifty-two  hundred  and  twenty-seven,  that  any  association  has  re- 
fused to  pay  its  circulating  notes,  he  may,  instead  of  cancelling 
its  bonds,  cause  so  much  of  them  as  may  be  necessary  to  redeem 
its  outstanding  notes  to  be  sold  at  public  auction  in  the  city  of 
New  York,  after  giving  thirty  days'  notice  of  such  sale  to  the 
association.  For  any  deficiency  in  the  proceeds  of  all  the  bonds  of 
an  association,  when  thus  sold,  to  reimburse  to  the  United  States 
the  amount  expended  in  paying  the  circulating  notes  of  the  asso- 
ciation, the  United  States  shall  have  a  paramount  lien  upon  all  its 


•     »  »  '  »    » 


101 

assets;  and  siich  deficiency  shall  be  made  good  out  of  such  assets 
in  preference  to  any  and  all  other  claims  whatsoever,  except  the 
necessary  costs  and  expenses  of  administering  the  same.  (Rev. 
Stat.  U.  S.  Sec.  5230.) 

§  99.  Sale  of  Bonds  at  Private  Sale. — The  Comptroller  ma}^ 
if  he  deems  it  for  the  interest  of  the  United  States,  sell  at  private 
sale  any  of  the  bonds  of  an  association  shown  to  have  made  default 
in  paying  its  notes,  and  receive  therefor  either  money  or  the  cir- 
culating notes  of  the  association.  But  no  such  bonds  shall  be  sold 
by  private  sale  for  less  than  par,  nor  for  less  than  the  market  value 
thereof  at  the  time  of  sale;  and  no  sales  of  any  such  bonds,  either 
public  or  private,  shall  be  complete  until  the  transfer  of  the  bonds 
shall  have  been  made  with  the  formalities  prescribed  by  sections 
fifty-one  hundred  and  sixty-two,  fifty-one  hundred  and  sixty-three, 
and  fifty-one  hundred  and  sixty-four.  (Eev.  Stat.  U.  S.  Sec. 
5231.) 

§  100.  Expense  of  Transporting  and  Assorting  Notes — Cost  of 
Plates. — That  each  of  said  associations  shall  reimburse  to  the 
Treasury  the  charges  for  transportation  and  the  costs  for  assorting 
Buch  notes;  and  the  associations  hereafter  organized  shall  also 
severally  reimburse  to  the  Treasury  the  cost  of  engraving  such 
plates  as  shall  be  ordered  by  each  association  respectively;  and  the 
amount  assessed  upon  each  association  shall  be  in  proportion  to 
the  circulation  redeemed,  and  be  charged  to  the  fund  on  deposit 
with  the  Treasurer.  (Act  June  20,  1874,  Ch.  343,  Sec.  3;  18 
Stat.  U.  S.  124.) 

§  101.  Same  Subject. — That  the  ^N'ational  banks  which  shall 
hereafter  make  deposits  of  lawful  money  for  the  retirement  in 
full  of  their  circulation  shall,  at  the  time  of  their  deposit,  be  as- 
sessed for  the  cost  of  transporting  and  redeeming  their  notes  then 
outstanding  a  sum  equal  to  the  average  cost  of  the  redemption  of 
National  bank  notes  during  the  preceding  year,  and  shall  there- 
upon pay  such  assessment;  and  all  National  banks  which  have 
heretofore  made,  or  shall  hereafter  make,  deposits  of  lawful  money 
for  the  reduction  of  their  circulation,  shall  be  assessed  and  shall 
pay  an  assessment  in  the  manner  specified  in  section  three  of  the 


102 

Act  approved  June  twentieth,  eighteen  hundred  and  seventy-four, 
for  the  cost  of  transporting  and  redeeming  their  notes  redeemed 
from  such  deposits  subsequently  to  June  thirtieth,  eighteen  hun- 
dred and  eighty-one.  (Act  July  12,  1882,  Ch.  290,  Sec.  8;  22 
Stat.  U.  S.  164.) 

§  102.  Disposition  to  be  Made  of  Notes  Eedeemed  by  Treasurer. 

— The  Secretary  of  the  Treasury  may,  from  time  to  time,  make 
such  regulations  respecting  the  disposition  to  be  made  of  cir- 
culating notes  after  presentation  at  the  Treasury  of  the  United 
States  for  payment,  and  respecting  the  perpetuation  of  the  evi- 
dence of  the  payment  thereof,  as  may  seem  to  him  proper.  (Kev. 
Stat.  U.  S.  Sec.  5232.) 

Notes  of  Failed  Banks. — This  section  was  originally  part  of  Section 
47  of  the  act  of  June  3,  1864,  and  had  application  only  to  notes  of  banks 
in  default,  the  bonds  of  which  were  forfeited,  and  which  notes  were 
redeemed,  under  a  further  provision  of  the  same  Section  47  (now 
Section  5229,  Rev.  Stat.  U.  S.,  at  the  Treasury  of  the  United  States. 

Certificates  of  Destruction. — ^The  disposition  to  be  made  of  this 
particular  class  of  notes  is  left  to  the  discretion  of  the  Secretary  of  the 
Treasury.  If  Section  5232  as  it  now  stands  is  construed  to  apply  solely 
to  the  notes  of  banks  in  default  redeemed  at  the  Treasury,  then  a  cer- 
tificate of  destruction  of  all  other  classes  of  notes  redeemed  at  the 
Treasury,  whether  of  banks  in  liquidation  or  of  banks  retiring  circula- 
tion, must  be  furnished  to  the  respective  associations  issuing  the  notes, 
as  the  mode  of  destruction  of  all  other  classes  of  notes  is  fixed  in  the 
various  sections  of  the  law  regarding  the  same.  (See  Section  5225, 
R.  S.  U.  S.;  Section  3  of  the  act  of  June  20,  1874;  Sections  6  and  7  of 
the  act  of  July  12,  1882,  and  Section  5184,  Rev.  Stat.  U.  S.  See  Sections 
93,  104.) 

§  103.  Cancellation  of  Notes. — All  notes  of  National  banking 
associations  presented  at  the  Treasury  of  the  United  States  for 
payment  shall,  on  being  paid,  be  cancelled.  (Eev.  Stat.  U.  S.  Sec. 
5233.) 

This  provision  is  modified  as  to  notes  fit  for  circulation  redeemed 
from  the  5  per  cent,  redemption  fund  by  the  act  of  June  20,  1874, 
Section  3,  which  permits  such  notes  to  be  returned  to  the  banks  for 
reissue. 


103 

§  104.  Mode  of  Destruction. — For  the  maceration  of  National 
bank  notes,  United  States  notes,  and  other  obligations  of  the 
United  States  authorized  to  be  destroyed,  ten  thousand  dollars; 
and  that  all  such  issues  hereafter  destroyed  may  be  destroyed  by 
maceration  instead  of  burning  to  ashes,  as  now  provided  by  law; 
and  that  so  much  of  sections  twenty-four  and  forty-three  of  the 
National  Currency  Act  as  requires  National  bank  notes  to  be 
burned  to  ashes  is  hereby  repealed.  (Act  June  23,  1874,  Ch.  455, 
Sec.  1.) 

By  Act  June  20,  1874,  Ch.  343,  Sec.  8  (18  Stat.  U.  S.  124)  it  Is 
made  the  duty  "of  the  Treasurer,  Assistant  Treasurers,  designated 
depositaries,  and  National  bank  depositaries  of  the  United  States, 
*  *  *  to  assort  and  return  to  the  Treasury,  for  redemption,  the 
notes  of  such  National  banks  as  have  failed,  or  gone  into  voluntary 
liquidation,  for  the  purpose  of  winding  up  their  affairs." 

9 


»    4    V       • 


CHAPTEE   IV. 
Eegulation  of  the  Banking  Business. 

Section  105.  Place  of  Business. 

106.  Requirements  as  to  Lawful  Money  Reserve. 

107.  Lawful  Money  Reserve  on  Circulation  Abolished. 

108.  Redemption  Cities  and  Reserve  Required. 

109.  Comptroller    May    Designate    Additional    Reserve 

Cities. 

110.  Comptroller  May  Designate  Central  Reserve  Cities. 

111.  Each  Bank  to  Receive  Notes  of  Other  Banks. 

112.  Rate  of  Interest  Limited. 

113.  Penalty  for  Taking  Usurious  Interest. 

114.  Dividends  and  Surplus  Funds. 

115.  Liabilities  of  any  Person,  etc.,  to  Bank. 

116.  Banks  Not  to  Loan  Upon  Their  Own  Stock. 

117.  Limit  of  Indebtedness. 

118.  Circulating  Notes  Not  to  be  Hypothecated. 

119.  Withdrawal  of  Capital — Dividends — Bad  Debts. 

120.  Enforcing  Payment  of  Capital  Stock. 

121.  Banks  Not  to  Pay  Out  Uncurrent  Notes. 

122.  Check   Not   to  be   Certified   Unless    Drawer   Has 

Amount  on  Deposit. 

123.  List  of  Shareholders. 

124.  Reports  of  Banks  to  Comptroller. 

125.  Reports  of  Dividends  and  Net  Earnings. 

126.  Verification  of  Returns  of  National  Banks. 

127.  Penalty  for  Failure  to  Make  Reports. 

128.  Reports  of  Savings  Banks  in  District  of  Columbia. 

129.  Stamping  Counterfeit  Notes. 

130.  Bank  Examiners — Duties — Powers,  etc. 

131.  Limitation  of  Visitorial  Powers. 

132.  Other  Banks  Forbidden  to  Use  Word  "  National.'^ 

§  105.  Place  of  Business. — The  usual  business  of  each  National 
banking  association  shall  be  transacted  at  an  office  or  banking 
house  located  in  the  place  specified  in  its  organization  certificate. 
(Rev.  Stat.  U.  S.  Sec.  5190.) 

104 


105 

Place  of  Business. — This  provision  must  be  construed  reasonably; 
and  where  a  part  of  the  legitimate  business  of  the  bank  can  not  be  trans- 
acted at  the  banking-house  it  may  be  done  elsewhere.  (Merchants'  Na- 
tional Bank  v.  State  National  Bank,  10  Wallace  604.)  In  the  important 
case  of  Merchants'  National  Bank  v.  State  National  Bank,  above  cited, 
the  cashier  of  the  defendant  bank  bought  a  quantity  of  gold  of  the 
plaintiff  bank,  and  gave  a  certified  check  therefor.  The  transaction  took 
place  at  the  ofllce  of  the  plaintiff  bank,  and  the  check  was  certified  there. 
It  was  objected  by  the  defendant  that  the  certification  was  not  good, 
because  not  made  by  the  cashier  at  the  defendant's  own  banking-house. 
But  it  was  held  that  there  was  no  force  in  this  objection.  The  Court 
said:  "  The  provision  of  the  act  of  Congress  as  to  the  place  of  business 
of  the  banks  created  under  it  must  be  construed  reasonably.  The  busi- 
ness of  every  bank  away  from  its  ofiice — frequently  large  and  important 
— is  unavoidably  done  at  the  proper  place  by  the  cashier  in  person,  or  by 
correspondents  or  other  agents.  In  the  case  before  us,  the  gold  must 
have  been  bought,  if  at  all,  at  the  buying  or  the  selling  bank,  or  at  some 
third  locality." 

Bbanch  Office. — The  question  often  arises  whether  a  bank  may  have 
a  branch  office  for  the  purpose  of  receiving  deposits,  paying  checks  etc., 
in  the  same  or  a  different  place.  In  Armstrong  v.  Second  National 
Bank  (38  Fed.  Rep.,  883).  A  National  bank  in  Cincinnati  had  made 
an  arrangement  with  a  bank  in  Springfield,  Ohio,  by  which  the  latter 
bank  was  to  cash  checks  drawn  on  the  Cincinnati  bank  by  customers 
living  in  Springfield.  This  arrangement  was  held  by  the  court  to  be 
void  on  several  grounds,  among  others,  that  it  is  not  competent  for  a 
National  Bank  to  provide  for  the  cashing  of  checks  upon  it  at  any  other 
place  than  an  office  or  banking-house  located  in  the  place  specified  in 
its  organization  certificate. 

The  word  "  place  "  and  "  at  an  office  or  banking  house  "  have  always 
been  construed  by  the  Comptroller  to  mean  the  legal  domicile  of  the 
corporation,  of  which  it  can  have  but  one,  and  this  construction  is 
sustained  by  the  Solicitor  of  the  Treasury  in  an  opinion  rendered 
August  10,  1899,  on  the  question  of  the  right  of  a  National  bank  to 
establish  and  maintain  an  auxiliary  cash  room  at  some  point  distant 
from  its  banking  house  for  the  puri)ose  of  receiving  deposits  and  paying 
checks.  As  to  branch  banks  at  the  Columbian  and  Louisiana  Purchase 
Expositions,  see  Sections  54  and  55. 

§  106.  Requirements  as  to  Lawful  Money  Reserve. — Every  N'a- 
tional  banking  association  in  either  of  the  following  cities: 
Albany,  Baltimore,  Boston,  Cincinnati,  Chicago,  Cleveland,  De- 
troit, Louisville,  Milwaukee,  New  Orleans,  New  York,  Phila- 
delphia, Pittsburg,  St.  Louis,  San  Francisco,  and  Washington,  shall 


106 

at  all  times  have  on  hand  in  lawful  money  of  the  United  States 
an  amount  equal  to  at  least  twenty-five  per  centum  of  the  aggregate 
amount  of  its  notes  in  circultion  and  its  deposits ;  and  every  other 
association  shall  at  all  times  have  on  hand,  in  lawful  money  of  the 
United  States,  an  amount  equal  to  at  least  fifteen  per  centum  of 
the  aggregate  amount  of  its  notes  in  circulation,  and  of  its  deposits. 
Whenever  the  lawful  money  of  any  association  in  any  of  the  cities 
named  shall  be  below  the  amount  of  twenty-five  per  centum  of  its 
circulation  and  deposits,  and  whenever  the  lawful  money  of  any 
other  association  shall  be  below  fifteen  per  centum  of  its  circulation 
and  deposits,  such  association  shall  not  increase  its  liabilities  by 
making  any  new  loans  or  discounts  otherwise  than  by  discounting 
or  purchasing  bills  of  exchange  payable  at  sight,  nor  make  any 
dividend  of  its  profits  until  the  required  proportion,  between  the 
aggregate  amount  of  its  outstanding  notes  of  circulation  and  de- 
posits and  its  lawful  money  of  the  United  States,  has  been  restored. 
And  the  Comptroller  of  the  Currency  may  notify  any  association, 
whose  lawful-money  reserve  shall  be  below  the  amount  above  re^ 
quired  to  be  kept  on  hand,  to  make  good  such  reserve ;  and  if  such 
association  shall  fail  for  thirty  days  thereafter  so  to  make  good 
its  reserve  of  lawful  money,  the  Comptroller  may,  with  the  con- 
currence of  the  Secretary  of  the  Treasury,  appoint  a  receiver  to 
wind  up  the  business  of  the  association,  as  provided  in  section 
fifty-two  hundred  and  thirty-four.     (Eev.  Stat.  U.  S.  Sec.  5191.) 

Obsolete  Pbovision. — The  Act  of  June  20,  1874,  relieved  National 
banks  of  the  necessity  of  keeping  reserve  upon  circulation,  but  it  is 
still  required  on  deposits.     (See  next  section.) 

Calculating  Reserve,  etc. — ^The  method  of  calculating  reserve,  and 
the  funds  available  therefor,  are  fully  treated  of  elsewhere  in  this  work. 
(See  page  294.) 

§  107.  Lawful  Money  Eeserve  on  Circulation  Abolished. — That 
section  thirty-one  of  the  "  National  Bank  Act "  be  so  amended  that 
the  several  associations  therein  provided  for  shall  not  hereafter 
be  required  to  keep  on  hand  any  amount  of  money  whatever  by 
dreason  of  the  amount  of  their  respective  circulations;  but  the 
moneys  required  by  said  section  to  be  kept  at  all  times  on  hand 
shall  be  determined  by  the  amount  of  deposits  in  all  respects,  as 


107 

provided  for  in  the  said  section.     (Act  June  20,  1874,  Ch.  343; 
Sec.  2;  18  Stat.  U.  S.,  Part  3,  123.) 

§  108.  Redemption  Cities  and  Reserve  Required. — Three-fifths  of 
the  reserve  of  fifteen  per  centum  required  by  the  preceding  section  * 
to  be  kept  may  consist  of  balances  due  to  an  association,  available  for 
the  redemption  of  its  circulating  notes,  from  associations  approved 
by  the  Comptroller  of  the  Currency,  organized  under  the  act  of 
June  three,  eighteen  hundred  and  sixty-four,  or  under  this  Title, 
and  doing  business  in  the  cities  of  Albany,  Baltimore,  Boston,  Char- 
leston, Chicago,  Cincinnati,  Cleveland,  Detroit,  Louisville,  Milwau- 
kee, New  Orleans,  New  York,  Philadelphia,  Pittsburg,  Eichmond^ 
St.  Louis,  San  Francisco,  and  Washington.  Clearing-house  certifi- 
cates, representing  specie  or  lawful  money  specially  deposited  for 
the  purpose  of  any  clearing-house  association  shall  also  be  deemed 
to  be  lawful  money  in  the  possession  of  any  association  belonging 
to  such  clearing-house  holding  and  owning  such  certificate  within 
the  preceding  section.     (Kev.  Stat.  U.  S.  Sec.  5192.) 

By  Sec.  5195  Rev.  Stat,  banks  in  the  cities  named  above  may  keep 
one-half  of  their  reserve  in  New  York  City. 

§  109.  Comptroller  May  Designate  Additional  Reserve  Cities. — 
"That  whenever  three-fourths  in  number  of  the  National  banks 
located  in  any  city  of  the  United  States  having  a  population  of 
twenty-five  thousand  people  shall  make  application  to  the  Comp- 
troller of  the  Currency,  in  writing,  asking  that  the  name  of  the 
city  in  which  such  banks  are  located  shall  be  added  to  the  cities 
named  in  sections  fifty-one  hundred  and  ninety-one  and  fifty-one 
hundred  and  ninety-two  of  the  Kevised  Statutes,  the  Comptroller 
shall  have  authority  to  grant  such  request,  and  every  bank  located 
in  such  city  shall  at  all  times  thereafter  have  on  hand,  in  lawful 
money  of  the  United  States,  an  amount  equal  to  at  least  twenty- 
five  per  centum  of  its  deposits,  as  provided  in  sections  fifty-one 
hundred  and  ninety-one  and  fifty-one  hundred  and  ninety-five  of 
the  Revised  Statutes."  (Act  March  3,  1887,  Ch.  378,  Sec.  1,  as 
amended  by  Act  March  3, 1903,  Ch.  1014;  32  Stat.  U.  S.  1223.) 

The  Act  of  March  3, 1903,  reduced  the  requirement  from  fifty  thousand 
to  twenty-five  thousand.    The  procedure  is,   in  brief,  for  each  bank 


•  Section  106  above. 


108 

which  wishes  to  join  in  the  application  to  authorize,  by  resolution  of 
its  directors,  some  officers  of  the  bank,  generally  the  president  or 
cashier,  to  sign  the  name  of  the  bank  to  the  petition  addressed  to  the 
Comptroller  of  the  Currency.  Blank  forms  for  the  resolution  of  the 
directors  and  blank  forms  of  petition  are  furnished  by  the  Comptroller 
of  the  Currency.     (For  forms  see  page  322.) 

§  110.  Comptroller  May  Designate  Central  Reserve  Cities. — That 
whenever  three-fourths  in  number  of  the  National  banks  located  in 
any  city  of  the  United  States  having  a  population  of  two  hundred 
thousand  people  shall  make  application  to  the  Comptroller  of  the 
Currency,  in  writing,  asking  that  such  city  may  be  a  central  reserve 
city,  like  the  city  of  New  York,  in  which  one-half  of  the  lawful- 
money  reserve  of  the  National  banks  located  in  other  reserve  cities 
may  be  deposited,  as  provided  in  section  fifty-one  hundred  and 
ninety-five  of  the  Revised  Statutes,  the  Comptroller  shall  have  au- 
thority, with  the  approval  of  the  Secretary  of  the  Treasury,  to  grant 
such  request,  and  every  bank  located  in  such  city  shall  at  all  times 
thereafter  have  on  hand,  in  lawful  money  of  the  United  States, 
twenty-five  per  centum  of  its  deposits,  as  provided  in  section  fifty- 
one  hundred  and  ninety-one  of  the  Revised  Statutes.  (Act  March 
3, 1887,  Ch.  378,  Sec.  2;  24  Stat.  U.  S.  560.) 

Under  this  act  Chicago  and  St.  Louis  have  been  made  central  reserve 
cities.  The  procedure  is  substantially  the  same  as  in  the  case  of  the 
designation  of  a  reserve  city.    (For  forms  see  page  322.) 

§  111.  Each  Bank  to  Keceive  Notes  of  Other  Banks. — Every  Na^ 
tional  banking  association  formed  or  existing  under  this  Title  shall 
take  and  receive  at  par,  for  any  debt  or  liability  to  it,  any  and  all 
notes  or  bills  issued  by  any  lawfully  organized  National  banking  as- 
sociation. But  this  provision  shall  not  apply  to  any  association  or- 
ganized for  the  purpose  of  issuing  notes  payable  in  gold.  (Rev. 
Stat.  U.  S.  Sec.  5196.) 

As  there  are  no  gold  banks  now  in  existence,  the  last  clause  of  this 
section  has,  at  present,  no  importance.  By  Act  July  12,  1882,  Ch. 
260,  Sec.  12,  it  is  provided  that  no  National  bank  shall  be  a  member 
of  any  clearing-house  in  which  gold  and  silver  certificates  are  not 
receivable  in  settlement  of  clearing-house  balances,  and  that  such 
certificates  may  be  counted  as  a  part  of  the  bank's  lawful  reserve. 
See  also  Act  March  14.  1900,  Ch.  41,  Sec.  6;  31  Stat.  U.  S.  48. 


109 

§  112.  Rate  of  Interest  limited. — Any  association  may  take, 
receive,  reserve,  and  charge  on  any  loan  or  discount  made,  or  upon 
any  note,  bill  of  exchange,  or  other  evidences  of  debt,  interest  at  the 
rate  allowed  by  the  laws  of  the  State,  Territory,  or  district  where 
the  bank  is  located,  and  no  more,  except  that  where  by  the  laws  of 
any  State  a  different  rate  is  limited  for  banks  of  issue  organized 
under  State  laws,  the  rate  so  limited  shall  be  allowed  for  asso- 
ciations organized  or  existing  in  any  such  State  under  this  Title. 
When  no  rate  is  fixed  by  the  laws  of  the  State,  or  Territory,  or 
district,  the  bank  may  take,  receive,  reserve,  or  charge  a  rate  not 
exceeding  seven  per  centum,  and  such  interest  may  be  taken  in 
advance,  reckoning  the  days  from  which  the  note,  bill,  or  other 
evidence  of  debt  has  to  run.  And  the  purchase,  discount,  or  sale 
of  a  bona-fide  bill  of  exchange,  payable  at  another  place  than 
the  place  of  such  purchase,  discount,  or  sale,  at  not  more  than 
the  current  rate  of  exchange  for  sight-drafts  in  addition  to  the 
interest,  shall  not  be  considered  as  taking  or  receiving  a  greater 
rate  of  interest.     (Rev.  Stat.  U.  S.  Sec.  5197.) 

State  Rate  Limit. — This  section  allows  National  banks  to  charge  the 
rate  of  interest  allowed  by  the  State  to  natural  persons  generally,  and  a 
higher  rate  if  State  banks  of  issue  are  authorized  to  charge  a  higher 
rate.  (Tiffany  v.  National  Bank,  18  Wallace,  409.)  The  Supreme  Court 
of  the  United  States  has  explained  the  meaning  of  this  section  as  fol- 
lows: "  It  was  expected  that  they  (the  National  banks)  would  come 
into  competition  with  State  banks,  and  it  was  intended  to  give  them  at 
least  equal  advantages  in  such  competition.  In  order  to  accomplish  this 
they  were  empowered  to  reserve  interest  at  the  same  rates,  whatever 
those  rates  might  be,  which  were  allowed  to  similar  State  institutions. 
This  was  considered  indispensable  to  protect  them  against  possible 
unfriendly  State  legislation.  Obviously,  if  State  statutes  should  allow 
to  their  banks  of  issue  a  rate  of  interest  greater  than  the  ordinary  rate 
allowed  to  natural  persons.  National  banking  associations  could  not 
compete  with  them,  unless  allowed  the  same.  On  the  other  hand,  if  such 
associations  were  restricted  to  the  rates  allowed  by  the  statutes  of  the 
State  to  banks  which  might  be  authorized  by  the  State  laws,  unfriendly 
legislation  might  make  their  existence  in  the  State  impossible.  A  rate 
of  Interest  might  be  prescribed  so  low  that  banking  could  not  be  carried 
on,  except  at  a  certain  loss.*'    {Id.) 

General  State  Rate  Governs. — But  it  is  the  rate  of  Interest  allowed 
to  the  banks  of  the  State  generally  that  a  National  bank  may  charge; 
and  the  fact  that  a  few  of  the  State  banks  are  specially  authorized  to 


110 

take  a  higher  rate  does  not  warrant  the  National  banks  in  doing  the 
same.  (Gruber  v.  First  National  Bank,  87  Pa.  St.,  468;  Duncan  v.  First 
National  Bank  of  Mount  Pleasant,  11  Bankers'  Magazine,  787.  But  see 
First  National  Bank  of  Mount  Pleasant  v.  Tinstman,  36  Legal  Intelli- 
gencer, 228.)  Nor  is  it  to  be  understood  that  whatever  by  the  laws  of 
the  State  is  lawful  for  natural  persons  in  acquiring  title  to  negotiable 
paper  is  lawful  for  National  banks.  (National  Bank  v.  Johnson,  104 
U.  S.,  271.)  Thus,  though  the  State  law  fixes  no  limit  to  the  rate  which 
natural  persons  may  take  for  the  discount  or  purchase  of  business  paper, 
this  does  not  authorize  the  National  banks  to  discount  such  paper  at  a 
higher  than  the  legal  rate.  (Johnson  v.  National  Bank  of  Gloversville, 
74  N.  Y.,  329;  affirmed  in  National  Bank  v.  Johnson,  104  U.  S.,  271.) 

Seven  Peb  Cent.  Limit. — ^And  where  the  State  law  does  not  limit  the 
rate  of  Interest  which  may  be  charged  on  loans  to  corporations,  a  Na- 
tional bank  located  in  that  State  can  not  charge  more  than  seven  per 
cent,  on  such  loans.  (In  re  Wild,  11  Blatchford,  243.)  But  if  the 
statutes  of  the  State  expressly  authorize  parties  to  contract  for  any 
rate  of  interest  National  banks  may  do  likewise,  and  are  not,  in  such 
case,  limited  to  seven  per  cent.  (Daggs  v.  Phoenix  Bank,  177  U.  S.  549; 
Hinds  V.  Marmelejo,  60  Cal.,  229;  National  Bank  v.  Bruhn,  64  Tex., 
571;  Rockwell  v.  Farmers'  National  Bank,  4  Colo.  App.,  562;  Wol- 
verton  v.  Exchange  National  Bank,  11  Wash.,  94;  Yakina  National 
Bank  v.  Kinne,  6  Wash.,  384;  Guild  v.  First  National  Bank  of  Dead- 
wood,  4  South  Dakota,  566.)  Where  a  State  statute  fixes  a  certain 
rate  as  the  legal  rate,  but  authorizes  parties  to  agree  in  writing 
for  a  higher  rate,  the  National  banks  are  permitted  to  charge  such 
higher  rate.  (Wiley  v.  Starbuck,  44  Ind.,  298;  Newell  v.  National  Bank 
of  Somerset,  12  Bush,  57.)  A  National  bank  in  Mississippi  is  not  al- 
lowed to  retain  interest  in  advance,  but  can  charge  interest  only  on  the 
sum  actually  loaned.  (Timberlake  v.  First  National  Bank,  43  Fed.  Rep., 
231.)  A  National  bank  located  in  Ohio  may,  since  the  repeal  of  the 
statute  of  that  State,  fixing  the  rate  of  interest  for  bank  of  issue,  reserve 
and  charge  interest  at  the  rate  of  eight  per  cent.  (La  Dow  v.  First 
National  Bank  of  New  London,  51  Ohio  St.,  234.) 

Agreement  as  to  Time  of  Entering  Credit. — The  bank  and  its  cus- 
tomer have  the  right  to  agree  as  to  the  time  of  entering  credits,  and  if 
such  agreement  is  made  in  good  faith  to  equalize  the  interest  on  differ- 
ent items,  and  not  for  the  purpose  of  receiving  illegal  interest,  it  is  not 
a  violation  of  the  law.  (Timberlake  v.  First  National  Bank,  43  Fed. 
Rep.  231.)  Therefore,  where  drafts  are  from  time  to  time  deposited  in 
a  bank,  some  of  them  being  payable  on  demand  and  some  on  time,  an 
agreement  between  the  bank  and  the  depositor  that  credits  shall  be 
given  for  such  drafts  on  the  day  after  their  deposit,  the  depositors 
being  charged  with  the  full  legal  rate  for  any  over-drafts,  does  not  con- 


Ill 

stitute  usury,  when  such  agreement  is  made  in  good  faith  in  order  to 
save  involved  calculations.     (Id.) 

Application  of  Payments. — Where  payments  are  made  generally  to  a 
National  bank  on  a  promissory  note  which  includes  unlawful  interest, 
they  will  be  applied  on  the  principal.  (Hall  v.  First  National  Bank  of 
Fairfield,  30  Neb.,  94;  Citizens'  National  Bank  v.  Forman's  Assignee, 
111  Ky.,  206.)  The  fact  that  the  payments  made  by  the  debtor  have 
been  applied  by  the  bank  on  its  books  to  interest  as  such  does  not 
authorize  the  presumption  that  the  debtor  so  applied  them,  where  he 
had  no  access  to  the  books,  and  no  knowledge  of  the  application  made 
by  the  bank.  (Second  National  Bank  of  Richmond  v.  Fitzpatrick,  111 
Ky.,  228.) 

Purchase  of  Drafts. — In  a  case  in  the  United  States  Circuit  Court  of 
Appeals  it  was  held  that  where  a  National  bank  purchases  drafts  at  a 
rate  of  discount  larger  than  the  rate  of  interest  allowed  by  the  law  of 
the  State,  this  will  be  usury.  (Danforth  v.  National  State  Bank,  48 
Fed.  Rep.,  271.) 

UsuRT  Paid  by  Corporations. — The  inhibition  contained  in  this  sec- 
tion is  general  and  forbids  the  taking  of  usurious  interest  from  an  arti- 
ficial, as  well  as  from  a  natural,  person.  (Albion  Bank  v.  Montgomery, 
54  Neb.,  681.) 

Promise  of  Cashier  to  Pay  Usurious  Interest. — The  promise  of  the 
Cashier  to  pay  interest  upon  a  deposit  at  an  usurious  rate  will  not  bind 
the  bank;  but  the  bank  would  be  bound  to  return  the  amount  actually 
received  by  it.     (Hanson  v.  Heard,  69  N.  H.,  190.) 

Usury  Paid  by  National  Banks. — A  State  statute  providing  that  cor- 
porations shall  not  plead  usury  applies  to  National  banks.  (Bingham- 
ton  Trust  Company  v.  Anten,  68  Ark.,  299.) 

§  113.  Penalty  for  Taking  TJsurious  Interest. — The  taking,  re- 
ceiving, reserving,  or  charging  a  rate  of  interest  greater  than  is 
allowed  by  the  preceding  section,  when  knowingly  done,  shall  be 
deemed  a  forfeiture  of  the  entire  interest  which  the  note,  bill, 
or  other  evidence  of  debt  carries  with  it,  or  which  has  been  agreed 
to  be  paid  thereon.  In  case  the  greater  rate  of  interest  has  been 
paid,  the  person  by  whom  it  has  been  paid,  or  his  legal  representa- 
tives, may  recover  back,  in  an  action  in  the  nature  of  an  action 
of  debt,  twice  the  amount  of  the  interest  thus  paid  from  the  as- 
sociation taking  or  receiving  the  same;  provided  such  action  is 
commenced  within  two  years  from  the  time  the  usurious  trans- 
action occurred.     (Rev.  Stat,  U,  S.  Sec.  5198.) 


112 

Intent  of  the  Law. — The  Supreme  Court  of  the  United  States  has 
analyzed  this  section  as  follows :  "  Two  categories  are  thus  defined,  and 
the  consequences  denounced.  (1)  Where  illegal  interest  has  been 
knowingly  stipulated  for,  but  not  paid,  then  only  the  sum  lent,  without- 
interest,  can  be  recovered.  (2)  Where  such  illegal  interest  has  been  paid, 
then  twice  the  amount  so  paid  can  be  recovered  in  a  penal  action  of  debt^ 
or  suit  in  the  nature  of  such  action,  against  the  offending  bank,  brought 
by  the  persons  paying  the  same,  or  their  legal  representatives."  (Bar- 
net  V.  Muncie  National  Bank,  98  U.  S.,  855.) 

Remedy  Where  Action  is  by  the  Bank. — ^Where  the  bank  sues  to  re- 
cover the  loan,  it  can  not,  if  there  has  been  usury,  and  the  defendant 
pleads  this  defense,  recover  any  interest  at  all,  but  only  the  principal  of 
the  loan.  (Barnet  v.  Muncie  National  Bank,  98  U.  S.,  855.)  But  in  such  an 
action  the  defendant,  if  he  has  paid  the  usurious  interest,  can  not  avail 
himself  of  such  payment  as  a  set-off  or  counter-claim  against  the  princi- 
pal of  the  loan  sued  on;  but  he  must  bring  a  separate  action  therefor. 
(Barnet  v.  Muncie  National  Bank,  98  U.  S.,  855;  Haseltine  v.  Central 
National  Bank,  183  U.  S.,  132;  Peterborough  National  Bank  v.  Childs, 
133  N.  Y.,  248;  National  Bank  of  Auburn  v.  Lewis,  81  N.  Y.,  15;  Ellis  v. 
First  National  Bank  of  Olney,  11  Bradw.,  275;  Rockwell  v.  Farmers* 
National  Bank,  4  Colo.  App.,  562;  Huggin  v.  Citizens'  National  Bank,  6 
Tex.  Civ.  App.,  33;  Norfolk  National  Bank  v.  Schwenk,  46  Neb.,  381; 
Marion  National  Bank  v.  Thompson,  101  Ky.,  277;  First  National  Bank 
V.  Hunter,  109  Tenn.,  91;  Cox  v.  Beck,  83  Fed.  Rep.,  269.)  And  usurious 
interest  paid  on  renewing  a  series  of  notes  can  not,  in  an  action  by  the 
bank  on  the  last  of  them,  be  applied  in  satisfaction  of  the  debt  (Dries- 
bach  V.  National  Bank,  104  U.  S.,  52;  Charleston  National  Bank  v.  Brad- 
ford, 51  W.  Va.,  255.) 

What  Interest  Forfeited— Interest  afteb  Maturity. — Where  the 
instrument  carries  with  it  illegal  interest,  the  whole  interest  is  for- 
feited, and  not  merely  that  which  the  party  borrowing  may  agree  to 
pay.  The  usury  destroys  the  interest-bearing  power  of  the  obligation, 
and  there  is  no  point  of  time  from  which  it  can  bear  interest.  Not  only 
does  it  forfeit  the  interest  accruing  before  maturity,  but  as  well  that 
accruing  after  maturity  (Lucas  v.  Grovemment  National  Bank,  78  Pa, 
St.,  228;  Shunk  v.  First  National  Bank  of  Galion,  22  Ohio  St.,  508; 
National  State  Bank  v.  Brainard,  61  Hun.,  339;  First  National  Bank  v. 
Grimes,  49  Kans.,  219),  though  the  latter  rate  be  lawful  (Shafer  v.  First 
National  Bank,  53  Kans.,  614),  or  the  interest  which  otherwise  would 
accrue  by  law  upon  non-payment  after  maturity.  (Henderson  National 
Bank  v.  Alves,  91  Ky.,  142.)  And  an  amount  paid  on  the  paper  after 
the  maturity  thereof  must  be  credited  on  the  principal  without  regard 
to  when  the  interest  thereon  accrued.  (National  State  Bank  v.  Brain- 
ard, 61  Hun.,  339.)    By  charging  more  than  legal  interest  on  over-drafts 


113 

the  bank  will  lose  the  right  to  recover  any  interest  at  all.  (Third  Na- 
tional Bank  of  Philadelphia  v.  Miller,  90  Pa.  St.,  241.)  Though  it  has 
been  held  that  a  National  bank  by  contracting  for  usurious  interest  for- 
feits interest  only  to  the  date  of  bringing  suit  on  the  note,  and  judgment 
for  the  principal  should  bear  interest  at  the  legal  rate  from  the  date  of 
filing  the  petition.  (Second  National  Bank  of  Richmond  v.  Fitzpatrick, 
111  Ky.,  228.)  Where  a  National  bank  has  re-discounted  notes  at  a 
usurious  rate  of  interest,  the  fact  that  the  bank  for  which  the  re- 
discount was  made  has  charged  illegal  interest  on  those  notes  to  its 
customers  will  not  affect  its  right  to  set  up  the  defense  of  usury  in  an 
action  by  the  re-discounting  bank.  (Id.)  As  to  whether  a  National 
bank  can  discount  a  note  containing  a  provision  to  pay  an  attorney's 
fee  if  suit  shall  be  brought  to  enforce  payment,  see  Merchants'  National 
Bank  v.  Sevier  (14  Fed.  Rep.,  662.) 

Renewals. — If  the  note  is  renewed  from  time  to  time,  no  portion  of 
usurious  interest  included  in  the  renewal  note  can  be  recovered.  (First 
National  Bank  of  Mead  Centre  v.  Grimes,  49  Kans.,  219.)  And  the 
usury  is  not  purged  by  settlements  and  renewal  notes  without  additional 
usury.  (Pickett  v.  Merchants'  National  Bank  of  Memphis,  32  Ark.,  346.) 
In  a  suit  upon  the  last  renewal  the  bank  can  recover  only  the  principal 
sum  originally  advanced.  (Snyder  v.  Mount  Sterling  National  Bank,  94 
Ky.,  231.)  And  any  payments  made  upon  any  of  such  notes  will  be 
applied  to  the  principal.  (Id.)  And  even  though  the  interest  upon  the 
renewal  notes  has  been  reduced  to  the  legal  rate,  no  part  of  the  same 
can  be  recovered.  (Farmers'  and  Mechanics'  Bank  v.  Hoagland,  7 
Fed.  Rep.,  159.)  A  note  given  for  already  accrued  interest,  in  part 
usurious,  is  without  consideration;  and  suspension  of  the  right  of  col- 
lection, between  its  date  and  maturity,  in  no  way  operates  to  supply 
the  essential  element  otherwise  lacking.  (McGhee  v.  First  National 
Bank  of  Tobias,  40  Neb.,  92.)  But  in  order  to  render  the  bank  liable  to 
the  penalty  of  doubling  the  amount  of  interest  paid  prescribed  by  this 
section,  the  illegal  interest  must  have  been  actually  paid;  and  it  is  not 
sufficient  that  it  was  carried  into  renewal  notes.  (Brown  v.  Marion 
National  Bank,  169  U.  S.,  416;  Osborn  v.  First  National  Bank,  175  Pa. 
St.,  494.) 

Penalty  for  Taking  Usury — Knowledge  of  Bank — ^Allegations  of 
Complaint. — To  subject  the  bank  to  the  penalty  for  taking  usurious 
interest  there  must  have  been  paid  not  only  a  larger  rate  of  interest 
than  that  allowed  by  law,  but  that  larger  rate  must  have  been  know- 
ingly received.  (Timberlake  v.  First  National  Bank,  43  Fed.  Rep.,  231.) 
And  the  petition  or  complaint  must  allege  that  it  was  knowingly  re- 
ceived. (Henderson  National  Bank  v.  Alves,  91  Ky.,  142;  Schuyler  Na- 
tional Bank  v.  Bullong,  24  Neb.,  321.)  As  to  when  allegations  of  com- 
plaint are  sufficient  to  sustain  a  judgment  in  an  action  against  a 


114 

National  bank  for  exacting  usurious  interest,  see  First  National  Bank  v. 
Morgan  (132.  U.  S.,  141),  Guild  v.  First  National  Bank  of  Deadwood 
(4  S.  D.,  566). 

Amount  of  Penalty. — The  penalty  is  twice  the  amount  of  interest 
paid,  and  is  not  limited  to  twice  the  excess  above  the  legal  rate. 
(First  National  Bank  v.  Watt,  184  U.  S.,  151;  Henderson  National  Bank 
V.  Alves,  91  Ky.,  142;  Schuyler  National  Bank  v.  Bullong,  28  Neb.,  684; 
Hill  V.  National  Bank  of  Barre,  15  Fed.  Rep.,  432;  Second  National 
Bank  v.  Fitzpatrick,  ill  Ky.,  228;  Watt  v.  First  National  Bank,  Minn., 
76  Minn.,  458.)  But  in  a  suit  to  recover  such  penalty  the  plaintiff  can- 
not be  allowed  interest  on  the  amount.  (McCreary  v.  First  National 
Bank  of  Morristown,  109  Tenn.,  128.)  It  has  been  held,  however,  that 
a  judgment  against  a  National  bank  for  twice  the  amount  of  interest 
paid,  as  a  penalty  for  taking  usury,  should  allow  interest  from  the  date 
of  filing  the  petition  to  recover  the  penalty,  that  being  the  date  of  the 
first  demand  therefor.  (Second  National  Bank  v.  Fitzpatrick,  111  Ky., 
22S.) 

Payment  of  Interest — ^What  Is. — In  order  that  the  borrower  may 
maintain  an  action  against  the  bank  to  recover  the  penalty  provided  by 
the  statute  for  taking  usurious  interest,  such  usurious  interest  must 
have  been  actually  paid,  and  it  is  not  sufficient  that  such  interest  is 
merely  charged  to  his  account.  (Hall  v.  First  National  Bank  of  Fairfield, 
30  Neb.,  99.)  Nor  is  it  sufficient  that  the  interest  was  reserved  from  the 
original  loan  by  way  of  discount.  (Smith  v.  First  National  Bank,  42 
Neb.,  687;  Citizens'  National  Bank  v.  Forman's  Assignee,  111  Ky.,  206), 
but  where  commercial  paper  is  transferred  to  and  discounted  by  the 
bank  at  a  rate  of  interest  exceeding  the  legal  rate,  and  the  net  proceeds 
after  deducting  the  interest  charged,  are  credited  to  the  transferee,  this 
Is  a  payment  of  the  interest  within  the  meaning  of  the  statute.  (Na- 
tional Bank  of  Rahway  v.  Carpenter,  52  N.  J.  Law,  165.) 

When  Right  of  Action  Accrues — Limitations. — The  period  of  two 
years  within  which  the  action  to  recover  the  penalty  must  be  brought 
begins  to  run  from  the  time  the  interest  is  actually  paid,  and  not 
from  the  time  it  was  agreed  to  be  paid.  (National  Bank  of  Daingerfield 
V.  Ragland,  181  U.  S.,  45.)  And  if  such  usurious  interest  is  included  in 
a  note,  the  limitation  does  not  begin  to  run  until  the  note  is  paid.  (Id.) 
So,  where  the  interest  upon  one  note  is  included  in  the  amount  of  an- 
other note,  which  is  subsequently  paid  in  full.  (Second  National  Bank 
V.  Fitzpatrick,  111  Ky.,  228.)  Each  payment  of  illegal  interest  is  re- 
garded as  "  a  transaction  "  within  the  intent  of  the  statute,  and  when 
such  payment  is  actually  made,  or  accrues,  the  two  years'  limitation 
commences  to  run.  (First  National  Bank  of  Dorchester  v.  Smith,  39 
Neb.,  90;  Lynch  v.  Bank,  22  West  Va.,  534;  National  Bank  v.  Carpenter, 


115 

52  N.  J.  Law,  165;  Bobs  v.  People's  National  Bank,  21  Fed.  Rep.,  888.) 
In  the  case  first  cited  the  sum  of  $88,  illegal  interest,  was  paid  upon  a 
loan  more  than  two  years  prior  to  the  inception  of  the  action,  but  the 
loan  upon  which  such  usurious  interest  was  received  by  the  bank  was 
not  paid  fully  until  within  two  years  before  the  bringing  of  the  suit.  It  was 
held  that  the  limitation  began  to  run  from  the  time  the  interest  was  so 
paid.  It  is  not  sufficient  to  set  the  statute  in  operation  that  the  interest 
was  reserved  by  way  of  discount.  (Smith  v.  First  National  Bank, 
supra).  But  the  payment  of  the  loan  is  not  a  condition  precedent  to  the 
right  of  the  borrower  to  maintain  an  action  to  recover  the  penalty  for 
the  usurious  interest  paid.  The  penalty  for  all  illegal  interest  paid 
within  two  years  may  be  recovered  in  one  action,  whether  the  amount 
was  in  one  payment  or  in  several.  (Hintermister  v.  First  National 
Bank,  64  N.  Y.,  212.) 

Who  May  Being  Action  foe  Penalty. — Only  the  party  paying  the  il- 
legal interest,  or  his  representatives,  can  recover  the  penalty  therefor. 
(Timberlake  v.  First  National  Bank,  43  Fed.  Rep.,  231.)  The  action 
can  not  be  brought  by  a  guarantor  or  surety.  (Lazear  v.  National  Union 
Bank,  52  Md.,  73.)  And  one  of  the  joint  makers  of  a  note  can  not 
recover  the  penalty  where  the  illegal  interest  was  paid  by  the  other 
maker.  (Timberlake  v.  First  National  Bank,  43  Fed.  Rep.,  231;  First 
National  Bank  of  Corcordia  v.  Rowley,  52  Kans.,  394.)  But  where  a 
bankrupt  has  paid  illegal  interest,  his  assignee  may  bring  such  action. 
(Wright  V.  First  National  Bank,  8  Biss.,  243;  Crocker  v.  First  National 
Bank,  Thompson's  National  Bank  Cases,  317;  Henderson  National 
Bank  v.  Alves,  91  Kentucky,  142.  But  see  Osborn  v.  First  National  Bank 
of  Athens,  175  Pa.  St.,  474.)  But  if  the  trustee  in  bankruptcy  fails  to 
administer  such  asset,  the  bankrupt,  after  discharge,  may  sue  on  the 
claim.  (Lasater  v.  First  National  Bank  of  Jacksboro,  96  Tex.,  345.) 
The  right  is  conferred  upon  an  artificial,  as  well  as  upon  a  natural, 
person.  (Albion  National  Bank  v.  Montgomery,  54  Neb.,  681.)  But 
several  of  the  joint  makers  of  a  note  on  which  legal  interest  is  paid  by 
such  parties  individually  can  not  unite  in  one  action  to  recover  such 
penalty.     (Teague  v.  First  National  Bank  of  Salina,  5  Kan.  App.,  300.) 

The  statute  confers  upon  the  parties  separate  rights.  That  they  have 
paid  equal  amounts  can  not  change  the  rule.  The  cause  of  action  ac- 
crues to  the  one  paying  the  unlawful  interest,  and  to  each  one  making 
such  payments.  There  is  no  cause  of  action  to  the  makers  of  the  note  on 
which  usurious  interest  is  paid.  The  cause  of  action  arises  when  the 
unlawful  payment  is  made,  and  to  each  of  the  ones  making  such  pay- 
ments,   ild.) 

Effect  of  Usuey  on  the  Conteact  of  the  (Paeties. — Usury  does  not 
render  the  contract  void  (Farmers'  and  Mechanics'  National  Bank  v. 
Dearing,  91  U.  S.,  29  )j  nor  defeat  the  title  of  the  bank  to  the  instru- 


116 

ment  (Newell  v.  Somerset  First  National  Bank  (Ky.),  13  Ky.  L.  Rep., 
275) ;  nor  does  it  avoid  an  endorsement  or  guaranty  of  the  paper  upon 
which  the  usurious  interest  is  reserved  or  paid.  (Lazear  v.  National 
Union  Bank,  52  Md.,  78;  Gates  v.  First  National  Bank,  100  U.  S.,  239.) 
And  the  usurious  character  of  the  transaction  between  the  bank  and 
the  payee  will  not  affect  the  liabilities  of  antecedent  parties  to  the 
instrument.    (Smith  v.  Exchange  National  Bank,  26  Ohio  St.,  141.) 

State  Laws. — The  penalties  provided  by  this  section  of  the  National 
Bank  Act  are  exclusive;  and  the  usury  laws  of  the  State,  and  the  penal- 
ties therein  provided,  have  no  application  to  the  National  banks. 
(Farmers*  and  Mechanics'  Bank  v.  Bearing,  91  U.  S.,  29;  Stephens  v. 
Monongahela  Bank,  111  U.  S.,  197;  Barnet  v.  Muncie  National  Bank, 
98  U.  S.,  855;  Hintermister  v.  First  National  Bank,  64  N.  Y.,  212;  Cen- 
tral National  Bank  v.  Pratt,  115  Mass.,  539;  Davis  v.  Randall,  115  Mass., 
547;  First  National  Bank  v.  Garlinghouse,  22  Ohio  St.,  492;  Wiley  v. 
Starbuck,  44  Ind.,  298;  Florence  Railroad  and  Improvement  Company  v. 
Chase  National  Bank,  106  Ala.,  364;  Slaughter  v.  First  National  Bank 
of  Montgomery,  109  Ala.,  157;  Charleston  National  Bank  v.  Bradford, 
51  W.  Va.,  255.)  Nor  do  the  provisions  of  the  Judiciary  Acts  of  March 
3,  1887,  and  August  13,  1888,  have  the  effect  of  subjecting  National 
banks  to  the  penalties  fixed  by  the  States  for  exacting  unlawful  interest. 
(Norfolk  National  Bank  v.  Schwenk,  41  Neb.,  381.)  Nor  is  this  the 
effect  of  the  proviso  to  Section  4  of  the  Act  of  July  12,  1882.  (Lanhum 
V.  First  National  Bank  of  Crete,  46  Neb.,  663,)  But  a  National  bank 
which  has  succeeded  to  the  business  of  a  private  bank  may  incur  the 
penalties  which  attached  to  the  former  institution  when  endeavoring 
to  enforce  the  obligation  acquired  from  it.  (Exeter  National  Bank  v. 
Orchard,  42  Neb.,  579.)  Where  usurious  interest  is  paid  to  a  National 
bank,  the  transaction  is  governed  by  the  laws  of  the  United  States, 
though  the  security  is  taken  in  the  name  of  the  President  of  the  bank 
in  his  individual  name.  (Schuyler  National  Bank  v.  Gadsen,  191  U.  S., 
451.) 

JuBiSDiCTioN  OF  STATE  CouRTS. — The  defense  of  usury  may  be  set  up 
in  an  action  brought  in  a  State  court  (National  Bank  of  Winterset  v. 
Eyre,  52  Iowa,  114),  and  State  courts  have  jurisdiction  of  actions  for 
the  recovery  of  the  penalty  prescribed  for  taking  illegal  interest.  (Ord- 
way  V.  Central  National  Bank,  47  Md.,  217;  Beltz  v.  Columbia  National 
Bank,  87  Pa.  St.,  87;  Hade  v.  McVey,  31  Ohio  St.,  231;  McCreary  v. 
First  National  Bank,  109  Tenn.,  128.)  Such  action  may  be  brought  in 
any  local  court  in  the  county  having  jurisdiction  of  the  amount  in- 
volved. (Schuyler  National  Bank  v.  Bullong,  28  Neb.,  684;  First  Na- 
tional Bank  of  Tecumseh  v.  Overman,  22  Neb.,  116;  Henderson  National 
Bank  v.  Alves,  91  Ky.,  142.  But  see  Newell  v.  National  Bank  of  Som- 
erset, 12  Bush,  57.)     But  the  courts  of  one  State  have  no  jurisdiction 


117 

of  an  action  against  a  National  bank  located  in  another  State  to  recover 
the  penalty.  (Missouri  River  Telegraph  Company  v.  First  National 
Bank  of  Sioux  City,  74  111.,  217.) 

Construction  of  the  Statute. — The  statute  will  be  liberally  con- 
strued to  effect  the  ends  for  which  it  was  passed,  but  a  forfeiture  under 
Its  provisions  will  not  be  declared  unless  the  facts  upon  which  it  rests 
are  clearly  established.  And  since  the  courts  uniformly  incline  against 
the  declaration  of  a  forfeiture,  the  party  seeking  such  declaration  should 
be  held  to  make  convincing  proof  of  each  fact  essential  to  forfeiture. 
(Wheeler  v.  Union  National  Bank,  96  U.  S.,  785.)  A  doubt  as  to  whether 
there  has  been  a  taking  of  illegal  interest  will  be  resolved  in  favor  of 
the  bank.  (Timberlake  v.  First  National  Bank,  43  Fed.  Rep.,  231.) 
Thus  in  case  of  a  claim  of  forfeiture  for  taking  unlawful  interest  upon 
the  discount  of  bills  of  exchange  payable  at  another  place,  it  should 
appear  affirmatively  that  the  bank  knowingly  received  or  reserved  an 
amount  in  excess  of  the  statutory  rate  of  interest  and  the  current  ex- 
change for  sight  drafts;  and  if  it  is  not  shown  what  the  rate  of  ex- 
change was,  a  charge  of  one-quarter  of  one  per  cent,  in  addition  to  the 
statutory  rate  of  interest  would  not  be  sufficient  to  authorize  a  for- 
feiture. (Wheeler  v.  Union  National  Bank  of  Pittsburg,  96  U.  S., 
785.)  But  the  statute  is  not  a  penal  statute,  and  does  not  require  to 
be  strictly  construed.  (Albion  National  Bank  v.  Montgomery,  54  Neb^ 
681.) 

UsuBious  Loans  to  Dibectobs. — ^A  director  is  not,  by  reason  of  his 
position,  estopped  from  setting  up  the  defense  of  usury  in  an  action 
brought  against  him  by  the  bank.  (Bank  of  Cadiz  v.  Slemans,  34  Ohio 
St.,  142.) 

When  Rule  de  Minimis  Applies. — ^Where  the  illegal  interest  exacted 
amounts  to  only  five  cents,  the  rule  de  minimis  non  curat  lex  applies, 
and  the  bank  will  not  be  liable  to  a  penalty  therefor.  (Slaughter  v. 
First  National  Bank  of  Montgomery,  109  Ala.,  157.) 

Waiveb. — The  forfeiture  declared  by  the  National  Bank  Act  for  taking 
illegal  interest  is  not  waived  or  avoided  by  giving  a  separate  note  for 
this  interest,  or  by  giving  a  renewal  note  in  which  is  included  the 
usurious  interest.  (Brown  v.  Marion  National  Bank  of  Lebanon,  169 
U.  S.,  416.) 

§  114.  Dividends  and  Surplus  Funds. — The  directors  of  any  as- 
sociation may,  semi-annually,  declare  a  dividend  of  so  much  of 
the  net  profits  of  the  association  as  they  shall  Judge  expedient; 
but  each  association  shall,  before  the  declaration  of  a  dividend, 


118 

carry  one-tenth  part  of  its  net  profits  of  the  preceding  half  year 
to  its  surplus  fund  until  the  same  shall  amount  to  twenty  per 
centum  of  its  capital  stock.     (Rev.  Stat.  U.  S.  Sec.  5199.) 

Dividend  Peeiods. — This  section  is  permissive,  and  it  is  doubtful  if 
under  it  any  other  than  semi-annual  dividends  are  strictly  legal.  Some 
National  banks,  however,  declare  quarterly  dividends,  and  a  few  de- 
clare dividends  monthly. 

SuBPLus  Fund. — The  section  also  provides  for  the  accumulation  of  a 
surplus  fund  up  to  a  certain  limit.  The  sections  intervening  be- 
tween Sections  5199  and  5204,  Revised  Statutes  U.  S.,  contain  pro- 
visions which,  if  strictly  observed,  insure  the  sound  condition  of  the 
bank  and  prevent  the  payment  of  unearned  dividends,  or  the  payment 
of  dividends  when  the  bank's  business  is  too  extended  and  the  value  of 
its  assets  in  doubt 

Wrongful  Refusal  to  Declabe  Dividends. — ^Where  the  earnings  prop- 
erly applicable  to  a  dividend  are  ample  for  such  purpose,  and  the  direc- 
tors, or  a  majority  of  them,  acting  in  bad  faith  and  without  reasonable 
cause,  refuse  to  declare  a  dividend,  the  courts  will  interpose  on  behalf 
of  those  stockholders  who  otherwise  would  be  without  remedy,  and  re- 
quire the  directors  to  make  a  dividend  of  a  reasonable  amount.  (His- 
cock  V.  Lacy,  N.  Y.,  9  Misc.  (N.  Y.),  578.)  An  action  for  this  purpose 
may  be  maintained  in  a  State  court.     (Id.) 

Suit  to  Recover  Illegal  Dividends. — The  Receiver  of  an  insolvent 
National  bank  may  maintain  a  suit  in  equity  against  all  the  sharehold- 
ers of  the  bank  to  recover  dividends  unlawfully  paid  to  them  out  of  the 
capital  stock  when  the  bank  had  earned  no  net  profit  and  was  in  fact 
insolvent     (Hayden  v.  Thompson,  36  U.  S.  App.,  361.)     In  such  a  case 


Amendment  of  Sec.  5200,  Rev.  Stat,  (page  118  **  Digest") 
approved  June  22,  1906  : 

**  Sec.  5200.  The  total  liabilities  to  any  association,  of  any  per- 
son, or  of  any  company,  corporation,  or  firm  for  money  borrowed, 
including  in  the  liabilities  of  a  company  or  firm  the  liabilities  of 
the  several  members  thereof,  shall  at  no  time  exceed-  one-tenth 
part  of  the  amount  of  the  capital  stock  of  such  associations,  actually 
paid  in  and  unimpaired  and  one-tenth  part  of  its  unimpaired  surplus 
fund  :  Provided  J  however,  That  the  total  of  such  liabilities  shall  in 
no  event  exceed  thirty  per  centum  of  the  capital  stock  of  the  asso- 
ciation. But  the  discount  of  J)ills  of  exchange  drawn  in  good  faith 
against  actually  existing  values,  and  the  discount  of  commercial  or 
business  paper  actually  owned  by  the  person  negotiating  the  same 
shall  not  be  considered  as  money  borrowed." 

Note  : — The  Comptroller  rules  that  the  surplus  of  a  National  Bank  referred 
to  above  does  not  include  "  undivided  profits  "  and  that  therefore  the  latter 
can  not  be  included  as  a  basis  for  loans  unless  carried  to  the  surplus  fund  by 
vote  of  the  Directors. 


119 

Intent  of  Restriction. — The  general  purpose  of  this  section  Is  ob- 
vious. It  is  to  prohibit  any  bank  from  hazarding  a  large  amount  of  its 
funds  in  loans  to  any  one  person,  and  to  require  such  a  distribution  of 
the  risks  among  a  large  number  of  persons  that  the  failure  of  any  one 
or  two  customers  will  not  so  seriously  involve  the  bank  as  to  endanger 
its  solvency.  But  the  transactions  of  the  banks  would  be  unduly  ham- 
pered if  this  rule  applied  in  the  case  of  all  discounts,  and  so  an  ex- 
ception is  made  in  favor  of  "  bills  of  exchange  drawn  against  actually 
existing  values,"  and  "  commercial  or  business  paper  actually  owned  by 
the  person  negotiating  the  same."  In  Second  National  Bank  of  Oswego 
V.  Burt  (93  N.  Y.,  233),  it  was  said  by  the  New  York  Court  of  Appeals: 
"  The  object  of  this  provision  of  the  currency  act  was  to  guard  National 
banks  from  the  hazard  of  loaning  money  in  improvident  amounts  upon 
speculative  and  accommodation  paper,  but  it  contemplated  and  per- 
mitted, to  an  unlimited  amount,  the  discount  of  paper  used  and  re- 
quired in  faciltating  the  transfer  of  property  and  money  in  the  trans- 
action of  the  legitimate  business  of  the  country." 

When  Applicable. — Numerous  questions  arise  under  this  section 
which  cause  bank  officers  much  perplexity.  A  question  of  frequent 
occurrence  is.  Whether  a  loan  may  be  made  to  a  person  who  is  already 
an  indorser  on  paper  discounted  by  the  bank  to  the  amount  of  one- 
tenth  of  the  capital  stock?  It  is  quite  clear  from  the  language  of  the 
section  that  where  one  negotiates  paper  actually  owned  by  him  the 
liabilities  of  none  of  the  parties  to  such  paper  are  within  the  meaning 
of  the  provision.  It  has  no  more  application  to  the  maker  or  to  the 
prior  endorser  than  it  has  to  the  person  negotiating  the  paper.  Now, 
are  the  liabilities  of  the  sureties  included  when  the  paper  is  accommo- 
dation paper?  It  is  to  be  observed  that  the  liabilities  to  which  the  law 
refers  are  for  money  borrowed.  But  the  indorsers  are  not  borrowers, 
and  their  liability,  such  as  it  is,  is  merely  contingent.  There  does  not 
appear  to  be  anything  in  the  spirit  or  intent  of  the  law  which  would 
require  the  prohibition  to  be  applied  in  the  case  of  any  person  other 
than  those  to  whom  the  loans  are  made.  If  it  applied  to  the  sureties  as 
well,  then  the  bank  could  not  lawfully  take  any  paper  however  numer- 
ous the  parties  thereto — if  it,  at  the  time,  held  paper  to  the  amount 
of  one-tenth  of  its  capital  stock,  on  which  the  name  of  any  one  of  those 
parties  appeared,  and  notwithstanding,  moreover,  that  on  the  paper  al- 
ready held  by  the  bank  there  might  be  many  other  and  different  sureties 
besides  this  one.  We  do  not  believe  that  any  view  of  the  law  which 
would  lead  to  such  a  conclusion  would  be  sustained  by  the  courts. 

But  it  is  to  be  remembered  that  the  question,  who  is  the  borrower? 
is  not  always  to  be  determined  from  the  positions  of  the  parties  as 
they  appear  on  the  paper.  The  borrower  may  be  the  maker,  or  he  may 
be  an  indorser.     It  is  the  person  who  negotiates  the  paper  with  the 

10 


120 

bank,  who  procures  the  money  upon  it,  that  is  the  borrower,  irrespective 
of  whether  he  appears  thereon  as  indorser  or  guarantor  or  maker. 

Another  question  which  often  arises  is.  When  one  person  is  a  partner 
In  two  firms,  will  a  loan  of  the  maximum  amount  to  one  of  these  firms 
preclude  a  loan  to  the  other  firm?  The  Comptroller  of  the  Currency 
holds  that  the  liability  of  the  common  partner  is  to  be  deemed  the 
liability  of  each  of  the  two  firms.  But  as  to  the  correctness  of  this 
ruling  there  may  be  some  doubt.  It  is  the  individual  indebtedness  of 
the  different  parties  which  is  mentioned  in  the  statute.  Nothing 
is  said  about  including  the  liabilities  of  any  other  partner- 
ship, nor  is  such  an  intention  necessarily  to  be  inferred.  As 
each  partner  is  liable  for  all  the  debts  of  the  firm,  it  is 
reasonable  that  his  individual  liability  to  the  bank  should  be  Included  in 
the  liabilities  of  the  partnership;  but  the  fact  that  there  is  a  common 
partner  will  not  make  one  partnership  liable  for  the  debts  of  the  other, 
and  there  would,  therefore,  be  no  reason  why  the  liabilities  of  one 
firm  should  affect  the  right  of  the  bank  to  make  loans  to  the  other  firm. 

Still  another  question  is.  Whether  it  is  a  violation  of  this  provision 
to  make  a  loan  in  excess  of  one-tenth  of  the  amount  of  the  capital  stock, 
when  such  loan  is  secured  by  collaterals?  Such  loans  would  seem  to 
be  within  the  spirit,  as  well  as  the  letter,  of  the  law.  There  is  the  same 
danger  that  the  collaterals  may  turn  out  badly  that  there  is  that  the 
borrower  himself  may  become  involved  or  insolvent.  The  bank's  esti- 
mate of  their  value  must  be,  like  its  estimate  of  the  responsibility  of  the 
borrower,  merely  a  matter  of  judgment  and  opinion. 

Penalty. — The  only  penalty  for  violation  of  this  section  is  the  lia- 
bility which  the  bank  incurs  of  a  forfeiture  of  its  franchises,  as  pre- 
scribed in  Sec.  5239,  Rev.  Stat.  U.  S.,  and  though  the  loan  is  in  excess  of 
the  amount  here  prescribed,  the  bank  can  recover  the  full  amount  from 
the  borrower.  (Grold  Mining  Company  v.  Rocky  Mountain  National 
Bank,  96  U.  S.,  640;  Corcoran  v.  Batchelder,  147  Mass.,  541;  O'Hare  v. 
Second  National  Bank  of  Titusville,  77  Pa.  St.,  96;  Wyman  v.  Citizens' 
National  Bank  of  Faribault,  29  Fed.  Rep.,  734;  Stewart  v.  The  National 
Union  Bank  of  Maryland,  2  Abb.  U.  S.,  424;  Smith  v.  First  National 
Bank,  45  Neb.,  444.)  And  a  court  of  equity  will  not  enjoin  the  bank, 
at  the  instance  of  the  borrower,  from  transferring  to  innocent  third  per- 
sons notes  and  securities,  on  the  ground  that  the  notes  represent  part  of 
a  loan  made  in  excess  of  10  per  cent,  of  the  capital  of  the  association. 
(Elder  v.  First  National  Bank  of  Ottawa,  12  Kans.,  238.)  Where  a 
State  bank  makes  a  loan  to  one  person  of  an  amount  in  excess  of  one- 
tenth  part  of  its  capital,  and  is  afterwards  converted  into  a  National 
bank,  it  may,  after  conversion,  extend  the  time  for  payment  of  such 
loan  without  violating  this  section.  (Allen  v.  The  First  National  Bank 
of  Xenia,  23  Ohio  St.,  97.) 


131 

§  116.  Banks  Not  to  Loan  Upon  Their  Own  Stock. — No  asso- 
ciation shall  make  any  loan  or  discount  on  the  security  of  the 
shares  of  its  own  capital  stock,  nor  be  the  purchaser  or  holder  of 
any  such  shares,  unless  such  security  or  purchase  shall  be  neces- 
sary to  prevent  loss  upon  a  debt  previously  contracted  in  good  faith ; 
and  stock  so  purchased  or  acquired  shall,  within  six  months  from 
the  time  of  its  purchase,  be  sold  or  disposed  of  at  public  or  pri- 
vate sale;  or,  in  default  thereof,  a  receiver  may  be  appointed  to 
close  up  the  business  of  the  association,  according  to  section  fifty- 
two  hundred  and  thirty-four.     (Rev.  Stat.  U.  S.  Sec.  5201.) 

Bank  Can  Not  Acquire  Lien. — It  is  held  under  this  section  that  a 
National  bank  can  not  acquire  a  lien  on  its  own  stock  in  the  hands  of  its 
stockholders,  and  that  any  provision  in  the  articles  of  association  or 
by-laws,  or  in  the  certificates  of  stock  prohibiting  a  transfer  until  the 
liability  of  the  stockholder  to  the  bank  is  paid,  is  wholly  void.  (Bank 
V.  Lanier,  11  Wall.,  369;  Bullard  v.  National  Bank,  18  Wall.,  589;  Third 
National  Bank  v.  Buffalo  German  Ins.  Co.,  193  U.  S.,  581;  S.  C,  162, 
N.  Y.,  163;  Conklin  v.  The  Second  National  Bank,  45  N.  Y.,  655;  Dela- 
ware, Lackawanna  and  Western  Railroad  Company  v.  Oxford  Iron 
Company,  38  N.  J.  Eq.,  340;  Smith  v.  First  National  Bank,  115  Ga., 
608;  Evansville  National  Bank  v.  Metropolitan  National  Bank,  2  Biss., 
527.)  A  provision  of  this  character  in  the  certificate  of  stock  does  not 
affect  th-e  rights  of  a  transferee,  or  operate  as  notice  to  him,  since  the 
provision  is  wholly  void.  (Third  National  Bank  v.  Buffalo  German  In- 
surance Company,  192  U.  S.,  581.)  But  when  a  stockholder  has 
pledged  his  stock  to  the  bank,  he  can  dispute  the  validity  of  such  pledge 
only  while  the  contract  is  executory,  and  the  security  still  subsists  in 
the  possession  of  the  bank;  if  the  stock  has  been  sold,  and  the  proceeds 
applied  to  the  payment  of  the  debt,  the  court  will  not  aid  him  to  recover 
the  value  of  his  stock.  (National  Bank  of  Xenia  v.  Stewart,  107  U. 
S.,  676.)  Where  a  bank  takes  a  pledge  of  its  own  stock  to  secure  a  de- 
posit made  with  another  bank,  this  is  a  lending  upon  the  security  of 
its  stock  within  the  meaning  of  this  section.  (Bank  v.  Lanier,  11  Wall., 
369.)  So  this  section  forbids  the  bank  to  hold  the  stock  of  the  share- 
holder to  secure  an  indebtedness  due  from  him  to  it  on  account  of  col- 
lections made  for  its  account.  (Conklin  v.  Second  National  Bank,  45 
N.  Y.,  655.)  But  this  section  will  not  prevent  a  bank  from  holding  a 
cash  dividend  as  pledged  for  the  indebtedness  of  the  shareholder  to  the 
bank.  (Hager  v.  Union  National  Bank,  63  Me.,  509.)  Nor  does  it  for- 
bid the  shares  of  the  stockholder  to  be  attached  for  his  indebtedness  to 
the  bank.    {Id.) 


in 

Effect  of  Violation. — Inasmuch  as  no  penalty  is  imposed  either  upon 
the  bank  or  the  borrower  for  a  violation  of  this  section,  such  violation 
may  not  be  urged  against  the  validity  of  the  transaction  by  any  one  ex- 
cept the  Government,  at  least  unless  the  objection  was  made  before  the 
contract  was  executed  or  while  the  security  was  in  the  hands  of  the 
bank.  (Walden  National  Bank  v.  Birch,  130  N.  Y.,  221.)  Therefore,  wher»i 
the  stock  is  held  by  the  cashier  in  trust  for  the  bank  the  invalidity  of 
the  transaction  can  not  be  set  up  as  a  defense  in  an  action  against  his 
sureties  for  his  wrongful  conversion  of  the  stock.  (Id.)  Nor  is  the 
statute  available  as  a  defense  to  one  who  has  bought  the  stock  of  the 
bank,  when  sued  by  the  Receiver  for  an  assessment  upon  the  same. 
(Lantry  v.  Wallace,  182  U.  S.,  536.) 

Bank  Disposing  of. — Where  a  National  bank  purchases  shares  of  its 
own  stock,  and  divides  them  among  its  directors,  to  whom  the  shares 
are  transferred  upon  the  stock  books,  the  transaction  is  void,  and  no 
title  passes.  (Meyers  v.  Valley  National  Bank,  13  National  Bankruptcy 
Register,  34.) 

The  sale  by  an  officer  to  himself  of  the  stock  of  the  bank  owned  by 
the  bank  may  be  ratified  by  the  bank  or  its  legal  representative;  but  a 
sale  by  himself  to  the  bank  of  its  own  stock,  where  he  acts  in  the 
double  capacity  of  seller  and  buyer,  cannot  be  ratified  when  the  pur- 
chase of  the  stock  by  the  bank  is  not  necessary  to  prevent  loss  upon  a 
debt  previously  contracted.  In  the  one  case  the  sale  of  the  stock  is  en- 
joined by  law,  and  its  sale  by  the  president  may  be  ratified,  however 
irregular  it  may  have  been  in  the  first  instance;  but  the  purchase  of  its 
own  stock  by  the  bank  is  interdicted  by  law,  and  for  this  act  there  can 
be  no  authorization  in  advance  and  no  ratification  afterwards.  (BunJy 
V.  Jackson,  24  Fed.  Rep.,  1628.) 

Where  a  purchase  of  its  own  stock  is  made  by  a  National  bank  for 
cash,  and  not  for  the  purpose  of  preventing  loss  upon  a  debt  previously 
contracted,  the  Receiver  of  the  bank  may  recover  from  the  seller  the 
amount  of  money  so  paid  to  him.  (Burrows  v.  Niblack,  84  Fed.  Rep., 
111.) 

This  section  does  not  forbid  a  National  bank  to  make  a  loan  upon 
the  security  of  the  stock  of  another  National  bank.  (National  Bank  v. 
Case,  96  U.  S.,  628.) 

§  117.  Limit  of  Indebtedness  of  Association. — "No  association 
shall  at  any  time  be  indebted,  or  in  any  way  liable,  to  an  amount 
exceeding  the  amount  of  its  capital  stock  at  such  time  axrtually 
paid  in  and  remaining  undiminished  by  losses  or  otherwise,  ex- 
cept on  account  of  demands  of  the  nature  following: 

First  ISTotes  of  circulation.  Second.  Moneys  deposited  with  or 
collected  by  the  association.     Third.  Bills  of  exchange  or  drafts 


123 

drawn  against  money  actually  on  deposit  to  the  credit  of  the  asso- 
ciation, or  due  tliereto.  Fourth,  Liabilities  to  the  stockholders  of 
the  asssociation  for  dividends  and  reserve  profits.  (Kev.  Stat.  U. 
S.  Sec.  5202.) 

A  National  bank  may  become  indebted  upon  any  contract  within  the 
scope  of  its  powers  to  the  full  amount  of  its  capital  stock  then  actually 
paid  in,  notwithstanding  that  it  has  notes  of  circulation,  deposits, 
special  funds  subject  to  draft,  or  funds  for  the  payment  of  declared  divi- 
dends to  stockholders,  which  either  alone  or  in  the  aggregate  equal  its 
paid-up  capital  stock.  (Weber  v.  Spokane  National  Bank,  64  Fed.  Rep., 
208.)  The  fact  that  an  indebtedness  of  a  National  bank  was  incurred 
in  violation  of  Rev.  Stat.  U.  S.,  5202,  is  no  defense  to  the  bank  or  its 
receiver.  {Id.  reversing  the  decision  of  the  United  States  Circuit  Court 
in  the  same  case.    See  50  Fed.  Rep.,  735.) 

§  118.  Circulating  Notes  Not  to  Be  Hypothecated. — N'o  asso- 
ciation shall,  either  directly  or  indirectly,  pledge  or  hypothecate 
any  of  its  notes  of  circulation,  for  the  purpose  of  procuring  money 
to  be  paid  in  on  its  capital  stock,  or  to  be  used  in  its  banking  opera- 
tions, or  otherwise;  nor  shall  any  association  use  its  circulating 
notes,  or  any  part  thereof,  in  any  manner  or  form,  to  create  or  in- 
crease its  capital  stock.     (Eev.  Stat.  U.  S.  Sec.  5203.) 

Notes  of  circulation  are  to  be  issued  by  the  bank  in  ordinary  course 
of  business.  This  section  is  intended  to  prevent  the  organization  of 
more  than  one  National  bank  with  the  same  capital.  Thus  it  was 
feared  that  unscrupulous  persons  with  a  small  capital,  say  sufficient 
to  purchase  the  minimum  of  bonds  required  by  law^  might  start  an 
alleged  bank,  and  by  dishonestly  certifying  the  capital  paid  up  secure 
circulation  which  they  could  use  in  procuring  additional  payments  of 
capital  or  money  in  bank.  If  the  notes  alone  were  in  the  bank,  the 
suspicions  of  the  examiner  might  be  excited;  but  by  changing  them  for 
other  money,  and  with  dummy  paper  to  fill  up,  a  bank  with  very  little 
real  capital  could  make  a  good  showing  on  its  books.  This  section  be- 
comes especially  important,  since  the  reduction  of  the  minimum  deposit 
of  United  States  bonds  to  one-quarter  of  capital,  in  case  of  banks  with  a 
capital  of  $150,000  or  less. 

§  119.  Withdrawal    of    Capital— Dividends— Bad    Debts.— No 

association,  or  any  member  thereof,  shall,  during  the  time  it  shall 
continue  its  banking  operations,  withdraw,  or  permit  to  be  with- 
drawUj  either  in  the  form  of  dividends  or  otherwise,  any  portion  of 


124 

its  capital.  If  losses  have  at  any  time  been  sustained  by  any  such 
association,  equal  to  or  exceeding  its  undivided  profits  then  on 
hand,  no  dividend  shall  be  made;  and  no  dividend  shall  ever  be 
made  by  any  association,  while  it  continues  its  banking  operations, 
to  an  amount  greater  than  its  net  profits  then  on  hand,  deducting 
therefrom  its  losses  and  bad  debts.  All  debts  due  to  any  associa- 
tions, on  which  interest  is  past  due  and  unpaid  for  a  period  of 
six  months,  unless  the  same  are  well  secured,  and  in  process  of 
collection,  shall  be  considered  bad  debts  within  the  meaning  of 
this  section.  But  nothing  in  this  section  shall  prevent  the  re- 
duction of  the  capital  stock  of  the  association  under  section  fifty- 
one  hundred  and  forty-three.     (Kev.  Stat.  U.  S.  Sec.  5204.) 

To  Prevent  Impaibment. — This  section  is  intended  to  guard  against 
any  impairment  of  the  paid-in  capital,  especially  against  that  insidious 
form  of  impairment  so  dangerous  to  stockholders — its  withdrawal  in 
the  shape  of  dividends. 

Undivided  Profits. — It  has  been  contended  that  the  undivided  profits 
mentioned  in  the  second  sentence  are  undivided  profits  exclusive  of 
legal  surplus,  which,  if  Section  5199  is  strictly  adhered  to,  should  at  all 
times  equal  one-tenth  of  the  total  net  profits  of  the  bank  until  such 
one-tenth  exceeds  one-fifth  of  the  capital,  and  it  is  the  rule  of  the 
Comptroller's  oflice  that  the  legal  surplus  must  never  be  used  to  pay 
dividends,  although  it  can,  of  course,  be  used  to  meet  losses  that  un- 
divided profits  other  than  legal  surplus  are  insufficient  to  meet.  Net 
profits,  both  in  this  section  and  in  Section  5199.  seem  to  mean  profits 
other  than  legal  surplus  which  remain  at  the  end  of  each  six  months 
after  deducting  all  expenses,  losses,  and  bad  debts. 

Bad  Debts. — The  definition  of  bad  debts  is  as  plain  as  can  be  made  of 
a  thing  so  difficult  to  define.  There  is  one  positive  sign,  viz.,  interest 
past  due  and  unpaid  for  six  months,  and  two  qualifications;  that  is, 
even  if  interest  is  due  and  unpaid  for  six  months,  they  are  still  not  bad 
debts,  if,  first,  they  are  well  secured,  and,  second,  also  in  process  of 
collection.  The  indefiniteness  of  this  definition  consists  in  the  differ- 
ence of  opinion  which  may  arise  as  to  security. 

§  120.  Enforcing  Payment  of  Capital  Stock. — Every  associa- 
tion which  shall  have  failed  to  pay  up  its  capital  stock,  as  required 
by  law,  and  every  association  whose  capital  stock  shall  have  become 
impaired  by  losses  or  otherwise,  shall,  within  three  months  after 
receiving  notice  thereof  from  the  Comptroller  of  the  Currency,  pay 


125 

the  deficiency  in  the  capital  stock,  by  assessment  upon  the  share- 
holders pro  rata  for  the  amount  of  capital  stock  held  by  each; 
and  the  Treasurer  of  the  United  States  shall  withhold  the  interest 
upon  all  bonds  held  by  him  in  trust  for  any  such  association,  upon 
notification  from  the  Comptroller  of  the  Currency,  until  other- 
wise notified  by  him.  If  any  such  association  shall  fail  to  pay  up 
its  capital  stock,  and  shall  refuse  to  go  into  liquidation,  as  pro- 
vided by  law,  for  tliree  months  after  receiving  notice  from  the 
Comptroller,  a  receiver  may  be  appointed  to  close  up  the  business 
of  the  association,  according  to  the  provisions  of  section  fifty-two 
hundred  and  thirty-four.  '*And  provided.  That  if  any  shareholder 
or  shareholders  of  such  bank  shall  neglect  or  refuse,  after  three 
months'  notice,  to  pay  the  assessment,  as  provided  in  this  section, 
it  shall  be  the  duty  of  the  board  of  directors  to  cause  a  sufficient 
amount  of  the  capital  stock  of  such  shareholder  or  shareholders  to 
be  sold  at  public  auction  (after  thirty  days'  notice  shall  be  given 
by  posting  such  notice  of  sale  in  the  office  of  the  bank,  and  by 
publishing  such  notice  in  a  newspaper  of  the  city  or  town  in 
which  the  bank  is  located,  or  in  a  newspaper  published  nearest 
thereto),  to  make  good  the  deficiency;  and  the  balance,  if  any, 
shall  be  returned  to  such  delinquent  shareholder  or  shareholders. 
(Rev.  Stat.  U.  S.  5205,  as  amended  by  Act  June  30,  1876,  Ch. 
156,  Sec.  4;  19  Stat.  U.  S.  63.) 

Procedure  to  Restore  Capital. — Under  this  section  the  Comptroller 
takes  the  initiatory  steps  in  the  proceedings  to  restore  an  impaired  or 
unpaid  capital   stock.     He  discovers  this  condition   of  affairs  either 
through  reports  made  to  his  office  by  the  banks,  or  from  reports  made 
to  him  by  examiners.    After  the  notice  is  issued,  the  matter  of  making 
the  assessment  is  in  the  hands  of  the  directors,  but  they  have  no  au- 
thority to  make  the  assessment  themselves.     For  this  purpose   it  is 
necessary  to  call  a  meeting  of  the  stockholders,   and  for  the  stock- 
holders to  lay  the  assessment  themselves.     (Commercial  Bank  v.  Wein- 
hard,  192  U.  S.,  243;  S.  C,  41  Oregon,  359;  Hulitt  v.  Bell,  85  Fed.  Rep.,    y. 
98.)     The  assessment  is  enforceable  only  by  subjecting  the  stock  of  the  f 
persons  refusing  to  pay,  and  no  action  will  lie  against  a  stockholder  i 
personally.    (Id.) 

Appointment  of  Receiver,^ — The  Comptroller,  however,  in  his  discre- 
tion, may  appoint  a  receiver  after  three  months.  This,  it  would  seem, 
makes  it  a  matter  of  judgment  for  the  directors  or  others  most  inter- 
ested in  the  bank  either  to  make  goo^  the  impaired  stock  of  the  de- 


126 

linquent  stockholders  and  trust  to  the  sale  to  reimburse  themselves,  or 
to  let  the  bank  go  into  a  receiver's  hands  at  the  end  of  three  months, 
if  the  Comptroller  should  insist  on  the  appointing  a  receiver. 

§  121.  Banks  Not  to  Pay  Out  Uncurrent  Notes. — No  associa- 
tion shall  at  any  time  pay  out  on  loans  or  discounts,  or  in  pur- 
chasing drafts  or  bills  of  exchange,  or  in  payment  of  deposits, 
or  in  any  other  mode  pay  or  put  in  circulation  the  notes  of  any 
bank  or  baulking  association  which  are  not,  at  any  such  time,  re- 
ceivable at  par,  on  deposit,  and  in  payment  of  debts  by  the  asso- 
ciation so  paying  out  or  circulating  such  notes;  nor  shall  any  as- 
sociation knowingly  pay  or  put  in  circulation  any  notes  issued  by 
any  bank  or  banking  association  which  at  the  time  of  such  paying 
out  or  putting  in  circulation  is  not  redeeming  its  circulating  notes 
in  lawful  money  of  the  United  States.  (Kev.  Stat.  U.  S.  Sec. 
5206.) 

This  section  was  inserted  in  the  law  at  a  time  when  there  was  still 
a  large  amount  of  State  bank  notes  in  circulation,  and  it  had  reference 
to  these  State  bank  notes  as  well  as  to  the  notes  of  National  banking 
associations. 

§  122.  Check  Not  to  Be  Certified  Unless  Drawer  Has  Amount 
Thereof  on  Deposit. — It  shall  be  unlawful  for  any  officer,  clerk,  or 
agent  of  any  National  banking  association  to  certify  any  check 
drawn  upon  the  association  unless  the  person  or  company  drawing 
the  check  has  on  deposit  with  the  association,  at  the  time  such 
check  is  certified,  an  amount  of  money  equal  to  the  amount  specified 
in  such  check.  Any  check  so  certified  by  duly  authorized  officers 
shall  be  a  good  and  valid  obligation  against  the  association;  but 
the  act  of  any  officer,  clerk,  or  agent  of  any  association,  in  violation 
of  this  section,  shall  subject  such  bank  to  the  liabilities  and  pro- 
ceedings on  the  part  of  the  Comptroller  as  provided  for  in  section 
fifty-two  hundred  and  thirty-four.     (Rev.  Stat.  U.  S.  Sec.  5208.) 

Liability  for  Certification. — The  bank  will  be  liable  upon  the  certifi- 
cation, though  it  is  made  in  violation  of  this  section.  (Thompson  v.  St. 
Nicholas  National  Bank,  146  U.  S.,  240,  S.  C,  113  N.  Y.,  325.)  In  the 
case  cited  the  following  language  of  the  New  York  Court  of  Appeals  is 
quoted  with  approval  by  the  Supreme  Court  of  the  United  States: 


127 

'*  It  will  be  seen  that  the  statute  affirms  the  legality  of  the  contract  of 
certification,  and  expressly  prescribes  the  consequences  which  shall 
follow  its  violation.  It  therefore  appears  that,  so  far  from  making  the 
contract  of  certification  void  and  illegal,  its  validity  is  expressly  af- 
firmed, and  the  consequences  which  follow  a  violation  are  specially 
defined,  and  impliedly  limit  the  penalty  incurred  to  a  forfeiture  of  the 
bank's  charter  and  the  winding  up  of  its  affairs.  There  is  a  clear  impli- 
cation from  this  provision  that  no  other  consequences  are  intended  to 
follow  a  violation  of  the  statute.  It  would,  indeed,  defeat  the  very 
policy  of  an  act  intended  to  promote  the  security  and  strength  of  the 
National  banking  system,  if  its  provisions  should  be  so  construed  as  to 
infiict  a  loss  upon  them,  and  a  consequent  impairment  of  their  financial 
responsibility." 

§  123.  List  of  Shareholders. — The  president  and  cashier  of  every 
National  banking  association  shall  cause  to  be  kept  at  all  times 
a  full  and  correct  list  of  the  names  and  residences  of  all  the  share- 
holders in  the  association,  and  the  number  of  shares  held  by  each, 
in  the  office  where  its  business  is  transacted.  Such  list  shall  be 
subject  to  the  inspection  of  all  the  shareholders  and  creditors  of 
the  association,  and  the  officers  authorized  to  assess  taxes  under 
State  authority,  during  business  hours  of  each  day  in  which  business 
may  be  legally  transacted.  A  copy  of  such  list,  on  the  first  Mon- 
day of  July  of  each  year,  verified  by  the  oath  of  such  president  or 
cashier,  shall  be  transmitted  to  the  Comptroller  of  the  Currency. 
(Eev.  Stat.  IJ.  S.  Sec.  5210.) 

Blanks  for  this  list  are  sent  to  all  banks  from  the  Comptroller's  office 
each  year,  in  time  to  enable  the  bank  to  make  and  send  the  list. 

§  124.  Reports  of  Banks  to  Comptroller. — Every  association  shall 
make  to  the  Comptroller  of  the  Currency  not  less  than  five  reports 
during  each  year,  according  to  the  form  which  may  be  prescribed 
by  him,  verfied  by  the  oath  or  affirmation  of  the  president  or 
cashier  of  such  association,  and  attested  by  the  signatures  of  at 
least  three  of  the  directors.  Each  such  report  shall  exhibit,  in 
detail  and  under  appropriate  heads,  the  resources  and  liabilities 
of  the  associations  at  the  close  of  business  on  any  past  day  by  him 
specified;  and  shall  be  transmitted  to  the  Comptroller  within  five 
days  after  the  receipt  of  a  request  or  requisition  therefor  from  him 
and  in  tbe  same  form  in  which  it  is  made  to  the  Comptroller  shall 
be  published  in  a  newspaper  published  in  the  place  where  such 


128 

association  is  established,  or  if  there  is  no  newspaper  in  the  place, 
then  in  one  published  nearest  thereto  in  the  same  county,  at  the 
expense  of  the  association;  and  such  proof  of  publication  shall  be 
furnished  as  may  be  required  by  the  Comptroller.  The  Comp- 
troller shall  also  have  power  to  call  for  special  reports  from  any 
particular  association  whenever  in  his  judgment  the  same  are 
necessary  in  order  to  a  full  and  complete  knowledge  of  its  con- 
dition.    (Rev.  Stat.  IT.  S.  Sec.  5211.) 

The  blanks  for  these  reports  are  furnished  by  the  Comptroller  of  the 
Currency.  The  reports  must  be  signed  and  sworn  to  by  the  president 
or  cashier.  The  vice-president  or  assistant  cashier  cannot  sign.  The 
attestation  of  the  directors  is  an  attestation  of  the  correctness  of  the 
report.  The  directors  are  expected  to  know  the  condition  of  their 
bank.  The  reports,  when  made,  are  abstracted  and  filed  in  the  Comp- 
troller's office. 

.  §  125.  Reports  of  Dividends  and  Net  Earnings. — In  addition  to 
the  reports  required  by  the  preceding  section,  each  association  shall 
report  to  the  Comptroller  of  the  Currency,  within  ten  days  after 
declaring  any  dividend,  the  amount  of  such  dividend,  and  the 
amount  of  net  earnings  in  excess  of  such  dividend.  Such  re- 
ports shall  be  attested  by  the  oath  of  the  president  or  cashier  of 
the  association.     (Rev.  Stat.  U.  S.  Sec.  5212) 

Full  instructions  as  to  making  reports  of  conditions,  of  dividends 
and  of  earnings  will  be  found  on  page . 

§  126.  Verification  of  Eetnms  of  National  Banks. — That  the 
oath  or  affirmation  required  by  section  fifty-two  hundred  and  eleven 
of  the  Revised  Statutes,  verifying  the  returns  made  by  National 
banks  to  the  Comptroller  of  the  Currency,  when  taken  before  a 
notary  public  properly  authorized  and  commissioned  by  the  State 
in  which  said  notary  resides  and  the  bank  is  located,  or  any  other 
officer  having  an  official  seal,  authorized  in  such  State  to  administer 
oaths,  shall  be  a  sufficient  verification  as  contemplated  by  said 
section  fifty-two  hundred  and  eleven:  Provided,  That  the  officer 
administering  the  oath  is  not  an  officer  of  the  bank.  (Act  Feb. 
Z%  JSai^  Ch.  82 ;  21  Stat.  U.  S.  352.) 


129 

§  127.  Penalty  for  Pailure  to  Make  Eeports. — Every  association 
which  fails  to  make  and  transmdt  any  report  required  under  either  of 
the  two  preceding  sections  shall  be  subject  to  a  penalty  of  one 
hundred  dollars  for  each  day  after  the  periods,  respectively,  therein 
mentioned,  that  it  delays  to  make  and  transmit  its  report.  When- 
ever any  association  delays  or  refuses  to  pay  the  penalty  herein 
imposed,  after  it  has  been  assessed  by  the  Comptroller  of  the 
Currency,  the  amount  thereof  may  be  retained  by  the  Treasurer  of 
the  United  States,  upon  the  order  of  the  Comptroller  of  the  Cur- 
rency, out  of  the  interest,  as  it  may  become  due  to  the  associa- 
tion, on  the  bonds  deposited  with  him  to  secure  circulation.  All 
sums  of  money  collected  for  penalties  under  this  section  shall  be 
paid  into  the  Treasury  of  the  United  States.  (Rev.  Stat.  U.  S. 
Sec.  5213.) 

These  penalties  for  failure  or  delay  in  making  reports  are  often  en- 
forced. 

§  128.  Reports  from  Savings  Banks,  etc.,  in  District  of  Colum- 
bia.— All  savings  banks  or  savings  companies  or  institutions  or- 
ganized under  authority  of  any  act  of  Congress  to  do  business  in 
the  District  of  Columbia  shall  be,  and  are  hereby,  required  to  make 
to  the  Comptroller  of  the  Currency,  and  publish,  all  the  reports 
which  National  banking  associations  are  required  to  make  and 
publish  under  the  provisions  of  Sections  5211,  5212  and  5213  of 
the  Eevised  Statutes,  and  shall  be  subject  to  the  same  penalties  for 
failure  to  make  or  publish  such  reports  as  are  therein  provided, 
which  penalties  may  be  collected  by  suit  before  the  supreme  court  of 
the  District  of  Columbia.  (Act  March  3,  1901,  Chap.  854,  Sec. 
713,  31  U.  S.  Stat.,  page  1302,  as  amended  by  Act  June  SO,  1902, 
Chap.  1329,  32  U.  S.  Stat.,  page  534.) 

§  129.  Stamping  Counterfeit  Notes. — That  all  United  States 
officers  charged  with  the  receipt  or  disbursements  of  public  moneys, 
and  all  officers  of  National  banks,  shall  stamp  or  write  in  plain 
letters  the  word  "  counterfeit,"  "  altered,"  or  "  worthless,"  upon 
all  fraudulent  notes  issued  in  the  form  of,  and  intended  to  circu- 
late as  money  which  shall  be  presented  at  their  places  of  business; 
and  if  such  officers  shall  wrongfully  stamp  any  genuine  note  of 


130 

the  United  States,  or  of  the  National  banks,  they  shall,  upon 
presentation,  redeem  such  notes  at  the  face  value  thereof.  (Act 
June  30,  1876,  Ch.  156,  Sec.  5;  19  Stat.  U.  S.  63.) 

§  130.  Bank  Examiners — Duties — Powers,  etc. — The  Comp- 
troller of  the  Currency,  with  the  approval  of  the  Secretary  of  the 
Treasury,  shall,  as  often  as  shall  be  deemed  necessary  or  proper, 
appoint  a  suitable  person  or  persons  to  make  an  examination  of 
the  affairs  of  every  banking  association,  who  shall  have  power 
to  make  a  thorough  examination  into  all  the  affairs  of  the  as- 
sociation, and,  in  doing  so,  to  examine  any  of  the  officers  and  agents 
thereof  on  oath;  and  shall  make  a  full  and  detailed  report  of  the 
condition  of  the  association  to  the  Comptroller.  All  persons  ap- 
pointed to  be  examiners  of  National  banks  not  located  in  the  re- 
demption cities  specified  in  section  five  thousand  one  hundred  and 
ninety-two  of  the  Eevised  Statutes  of  the  United  States,  or  in 
any  one  of  the  States  of  Oregon,  California,  and  Nevada,  or  in 
the  Territories,  shall  receive  compensation  for  such  examination 
as  follows:  For  examining  National  banks  having  a  capital  less 
than  one  hundred  thousand  dollars,  twenty  dollars;  those  having 
a  capital  of  one  hundred  thousand  dollars  and  less  than  three 
hundred  thousand  dollars,  twenty-five  dollars;  those  having  a 
capital  of  three  hundred  thousand  dollars  and  less  than  four  hun- 
dred thousand  dollars,  thirty-five  dollars;  those  having  a  capital 
of  four  hundred  thousand  dollars  and  less  than  five  hundred  thou- 
sand dollars,  forty  dollars;  those  having  a  capital  of  ^Ye  hundred 
thousand  dollars  and  less  than  six  hundred  thousand  dollars,  fifty 
dollars ;  those  having  a  capital  of  six  hundred  thousand  dollars  and 
over,  seventy-five  dollars;  which  amounts  shall  be  assessed  by  the 
Comptroller  of  the  Currency  upon,  and  paid  by,  the  respective  as- 
sociations so  examined,  and  shall  be  in  lieu  of  the  compensation 
and  mileage  heretofore  allowed  for  making  said  examinations; 
and  persons  appointed  to  make  examinations  of  National  banks  in 
the  cities  named  in  section  five  thousand  one  hundred  and  ninety- 
two  of  the  Eevised  Statutes  of  the  United  States,  or  in  any  one 
of  the  States  of  Oregon,  California,  and  Nevada,  or  in  the  Terri- 
tories, shall  receive  such  compensation  as  may  be  fixed  by  the 
Secretary  of  the  Treasury  upon  the  recommendation  of  the  Comp- 
troller of  the  Currency;  and  the  same  shall  be  assessed  and  paid 


131 

in  the  manner  hereinbefore  provided.  But  no  person  shall  be  ap- 
pointed to  examine  the  affairs  of  any  banking  association  of  which 
he  is  a  director  or  other  officer.     (Kev.  Stat.  U.  S.  Sec.  5240.) 

Examinations. — The  examinations  mentioned  in  this  section  are.  as 
a  rule,  made  about  once  a  year  in  the  case  of  each  National  bank. 
There  is  no  provision  as  to  the  number  of  persons  who  may  be  em- 
ployed as  examiners  by  the  Comptroller,  or  the  number  of  times  he  may 
examine  each  bank  within  a  given  period.  In  practice,  the  territory  of 
the  United  States  is  laid  off  into  districts,  which  districts  are,  however, 
varied  from  time  to  time  to  suit  the  convenience  of  the  Comptroller's 
oflace,  or  to  conform  to  its  views  as  to  the  eflSciency  of  the  service. 

Examinees. — A  National-bank  examiner  receives  a  regular  appoint- 
ment, and  then  awaits  orders  from  the  Comptroller.  He  may  be  as- 
signed to  a  district,  or  may  be  employed  at  large.  An  examiner  may  be 
employed  steadily  in  one  district,  or  he  may  be  shifted  from  one  dis- 
trict to  another.  There  is  no  fixed  salary.  The  amount  earned  each 
year  depends  on  the  number  of  banks  which  each  examiner  has  assigned 
to  him  for  examination.  When  the  reports  are  received  from  the 
examiners  they  are  scrutinized  in  the  Comptroller's  office,  and  if  they 
indicate  faults  in  the  management  of  the  banks,  letters  are  addressed 
usually  to  the  president  or  cashier  calling  attention  to  the  points  where 
improvement  is  necessary;  sometimes,  in  bad  cases,  the  directors  are  ad- 
dressed either  singly  or  collectively.  The  examiners  from  time  to  time 
send  in  their  bill  to  the  Comptroller,  who,  finding  such  bills  correct, 
assesses  each  bank  of  which  examination  has  been  made  according  to 
the  legal  rule.  When  the  money  is  paid  in  to  the  Comptroller  oy  the 
banks  it  is  sent  to  the  examiner.  The  examiner  has  no  right  to  ask  a 
bank  for  any  money  in  any  way,  shape,  or  form.  His  dealings  are  with 
the  Comptroller,  from  whom  he  receives  his  directions  and  to  whom  he 
renders  his  bills. 

Examinees'  Fees. — Section  5240,  U.  S.  R.  S.,  provides  that  a  certain 
rate  should  be  assessed  against  all  banks  in  proportion  to  their 
capital  in  the  States  then  existing,  excepting  from  this  fixed  rate 
banks  located  in  Oregon,  California,  Nevada,  the  Territories  and  the 
reserve  cities.  The  fees  for  examination  of  banks  located  in  the 
sections  and  cities  excepted  are,  under  the  provisions  of  the  section 
named,  fixed  by  the  Secretary  of  the  Treasury  upon  the  recommen- 
dation of  the  Comptroller  of  the  Currency.  The  fees  named  in  Sec- 
tion 5240,  U.  S.  R.  S.,  do  not  apply  to  banks  in  States  which  have 
been  admitted  as  States  since  the  passage  of  the  law  until  such  States 
become  sufficiently  settled  to  warrant  the  regular  assessment.  The 
special  fees  for  the  various  localities  exempted  from  the  fixed  rates 


132 

are  according  to  the  capital  of  the  bank,  and  each  Siate  or  Territory 
is  considered  separately  according  to  the  distances  to  be  traveled 
expenses  incurred,  etc.,  in  covering  the  entire  State  or  Territory. 

§  131.  Limitation  of  Visitorial  Powers. — ISTo  association  shall  be 
subject  to  any  visitorial  powers  other  than  such  as  are  authorized 
by  this  Title,  or  are  vested  in  the  courts  of  justice.  (Rev.  Stat.  U. 
S.  Sec.  5241.) 

m 

The  only  visitorial  powers  mentioned  in  the  act  are  those  mentioned 
in  the  preceding  section  and  in  Section  5210,  which  permits  officers 
authorized  to  assess  taxes  under  State  authority  to  inspect  the  list  of 
stockholders  during  business  hours.  There  are,  also,  the  general 
visitorial  powers  of  the  Comptroller  of  the  Currency.  The  courts  of 
justice  have,  of  course,  the  same  power  as  they  have  over  other  persons 
or  corporations,  and  subject  to  the  same  limitations  of  jurisdiction. 
The  right  of  a  stockholder  of  a  National  bank  to  inspect  its  books  is  a 
common-law  right,  and  not  dependent  upon  a  State  statute;  and  it  is 
not  impaired  by  the  provisions  of  this  section.  (Harkness  v.  Guthrie 
(Utah),  75  Pac.  Rep.,  624.) 

§  132.  Other  Banks  Forbidden  to  TTse  Word  "  National."— All 

banks  not  organized  and  transacting  business  under  the  National 
currency  laws,  or  under  this  Title,  and  all  persons  or  corporations 
doing  the  business  of  bankers,  brokers,  or  savings  institutions, 
except  savings  banks  authorized  by  Congress  to  use  the  word  *"  Na- 
tional "  as  part  of  their  corporate  name,  are  prohibited  from  using 
the  word  "  National  '^  as  a  portion  of  the  name  or  title  of  such 
bank,  corporation,  firm,  or  partnership;  and  any  violation  of  this 
prohibition  committed  after  the  third  day  of  September,  eighteen 
hundred  and  seventy-three,  shall  subject  the  party  chargeable 
therewith  to  a  penalty  of  fifty  dollars  for  each  day  during  which  it 
is  committed  or  repeated. 

The  penalty  under  this  section  is  a  general  one.  If  any  one  has 
knowledge  of  a  violation  of  this  provision  he  can  lay  a  complaint  before 
a  United  States  commissioner,  or  the  attention  of  the  United  States 
attorney  of  the  district  where  the  offense  has  been  committed  can  be 
called  to  it.  The  court  will  assume  that  a  bank  which  includes  in  its 
title  the  word  "  National  **  is  organized  under  the  National  Bank  Act. 
(Slaughter  v.  First  National  Bank  of  Montgomery,  109  Ala.,  157.) 


CHAPTER   V. 
Taxation. 

Section  133.  Tax  on  Circulating  Notes — General  Provision. 

134.  Tax  on  Circulating  Notes  Secured  by  Two  Per  Cent. 

Bonds. 

135.  Semi-Annual  Eetum  of  Circulation. 

136.  Assessment  if  Eeturn  is  Not  Made. 

137.  How  Tax  May  be  Collected. 

138.  Eefunding  Excess  of  Duties. 

139.  Duty  on  Notes  of  Insolvent  Bank  Abated. 

140.  When  Circulating  Notes  Exempt  from  Tax. 

141.  Tax  on  Notes  of  State  Banks,  etc..  Used  for  Circu- 

lation. 

142.  Tax  on  Notes  of  Cities,  etc..  Used  for  Circulation. 

143.  Monthly  Eeturns  of  Notes  of  State  Banks,  Cities, 

etc..  Used. 

144.  In  Default  of  Returns  Commissioner  to  Estimate. 

145.  Returns  for  Converted  State  Bank. 

146.  Certain  Provisions  Not  to  Apply  to  National  Banks. 

147.  State  Taxation  of  Shares  of  Stock  and  Real  Estate. 

148.  State  Taxation  of  National  Bank  Notes. 

149.  United  States  Bonds  Exempt  from  Taxation. 

150.  Taxation  of  Banks  in  District  of  Columbia. 

§  133.  Tax  on  Circulating  Notes — General  Provision. — In  lieu 
of  all  existing  taxes,  every  association  shall  pay  to  the  Treasurer  of 
the  United  States,  in  the  months  of  January  and  July,  a  duty  of 
one-half  of  one  per  centum  each  half  year  upon  the  average  amount 
of  its  notes  in  circulation.     (Rev.  Stat.  U.  S.  Sec.  5214.) 

The  tax  is  upon  the  average  amount  of  notes  in  circulation — not 
those  held  by  the  bank  or  in  transit  between  it  and  the  Comptroller's 
office  or  notes  due  from  the  Treasurer  for  redemption.  The  average 
may  be  calculated  by  adding  together  the  amount  of  circulation  out- 
standing each  business  day  of  the  semi-annual  period,  and  then  di- 
viding by  the  number  of  business  days.    See  next  Section. 

133 


134 

§  134.  Tax  on  Circulating  Notes  Secured  by  Two  Per  Cent. 
Bonds. — That  every  National  banking  association  having  on  de- 
posit, as  provided  by  law,  bonds  of  the  United  States  bearing  in- 
terest at  the  rate  of  two  per  centum  per  annum,  issued  under  the 
provisions  of  this  Act,  to  secure  its  circulating  notes,  shall  pay  to 
the  Treasurer  of  the  United  States,  in  the  months  of  January  and 
July,  a  tax  of  one-fourth  of  one  per  centum  each  half  year  upon 
the  average  amount  gf  such  of  its  notes  in  circulation  as  are  based 
upon  the  deposit  of  said  two  per  centum  bonds;  and  such  taxes 
shall  be  in  lieu  of  existing  taxes  on  its  notes  in  circulation  im- 
posed by  section  fifty-two  hundred  and  fourteen  of  the  Revised 
Statutes.  (Act  March  14,  1900,  Ch.  41,  Sec.  13;  31  Stat.  U.  S. 
49.) 

§  135.  Semi- Annual  Return  of  Circulation. — In  order  to  enable 
the  Treasurer  to  assess  the  duties  imposed  by  the  preceding  section, 
each  association ,  shall,  within  ten  days  from  the  first  days  of 
January  and  July  of  each  year,  make  a  return,  under  the  oath  of  its 
president  or  cashier,  to  the  Treasurer  of  the  United  States,  in  such 
form  as  the  Treasurer  may  prescribe,  of  the  average  amount  of  its 
notes  in  circulation,!  *  *  *  *  for  the  six  months  next  preceding 
the  most  recent  first  day  of  January  or  July.  Every  association 
which  fails  so  to  make  such  return  shall  be  liable  to  a  penalty  of 
two  hundred  dollars,  to  be  collected  either  out  of  the  interest  as  it 
may  become  due  such  association  on  the  bonds  deposited  with  the 
Treasurer,  or,  at  his  option,  in  the  manner  in  which  penalties  are 
to  be  collected  of  other  corporations  under  the  laws  of  the  United 
States.     (Eev.  Stat.  U.  S.  Sec.  5215.) 

The  blanks  for  these  returns  are  sent  to  the  banks  by  the  Treasurer, 
and  contain  full  instructions  as  to  the  proper  manner  in  which  to 
make  these  reports.  For  form  and  instructions  see  page  315.  The 
tax  on  capital  stock  and  deposits  having  been  repealed,  no  return  of 
the  amount  thereof  is  now  necessary. 

§  136.  Assessment  if  Eetum  is  Not  Made. — Whenever  any  asso- 
dation  fails  to  make  the  half-yearly  return  required  by  the  preced- 


t  The  provisions  omitted  here  required  a  return  of  the  average 
amount  of  capital  stock  and  deposits.  These  have  been  rendered 
obsolete  by  the  repeal  of  the  tax  on  those  items. 


135 

ing  section,  the  duties  to  be  paid  by  such  association  shall  be 
assessed  upon  the  amount  of  notes  delivered  to  such  association  by 
the  Comptroller  of  the  Currency.     (Eev.  Stat.  U.  S.  Sec.  5216.) 

It  Is  best  for  the  bank  to  make  up  its  own  average,  as  that  made  by 
the  Treasurer  would  necessarily  include  notes  of  the  bank  not  actually 
in  circulation. 

§  137.  How  Tax  May  Be  Collected. — Whenever  an  association 
fails  to  pay  the  duties  imposed  by  the  three  *  preceding  sections,  the 
sums  due  may  be  collected  in  the  manner  provided  for  the  collection 
of  United  States  taxes  from  other  corporations;  or  the  Treasurer 
may  reserve  the  amount  out  of  the  interest,  as  it  may  become  due, 
on  the  bonds  deposited  with  him  by  such  defaulting  association. 
(Rev.  Stat.  U.  S.  Sec.  5217.) 

§  138.  Kefunding  Excess  of  Duties. — In  all  cases  where  an  aeso- 
ciation  has  paid  or  may  pay  in  excess  of  what  may  be  or  has  been 
found  due  from  it,  on  account  of  the  duty  required  to  be  paid  to 
the  Treasurer  of  the  United  States,  the  association  may  state  an 
account  therefor,  which,  on  being  certified  by  the  Treasurer  of  the 
United  States  and  found  correct  by  the  First  Comptroller  of  the 
Treasury,  shall  be  refunded  in  the  ordinary  manner  by  warrant  on 
the  Treasury.     (Rev.  Stat.  U.  S.  5218.) 

There  is,  however,  no  special  appropriation  for  this  purpose.  The 
claim  for  recovery  of  excessive  taxes  paid,  if  presented  and  found 
correct  in  the  manner  indicated  in  this  section,  is  taken  into  account 
by  the  Secretary  of  the  Treasury  in  making  his  estimates  to  Congress. 
The  amount  necessary  to  pay  the  claim  is  usually  appropriated  by 
Congress,  and  the  claimant  will  then  receive  what  is  due  him,  by  war- 
rant, etc.,  as  stated  in  the  section. 

§  139.  Duty  on  Notes  of  Insolvent  Bank  Abated. — That  when- 
ever and  after  any  bank  has  ceased  to  do  business  by  reason  of 
insolvency  or  bankruptcy,  no  tax  shall  be  assessed  or  collected,  or 
paid  into  the  Treasury  of  the  United  States,  on  account  of  such 
bank,  which  shall  diminish  the  assets  thereof  necessary  for  the  full 
payment  of  all  its  depositors;  and  such  tax  shall  be  abated  from 

♦In  this  compilation,  this  comprises  the  four  preceding  Sections, 
ii 


136 

such  National  banks  as  are  found  by  the  Comptroller  of  the  Cur- 
rency to  be  insolvent;  and  the  Commissioner  of  Internal  Kevenue, 
when  the  facts  shall  so  appear  to  him,  is  authorized  to  remit  so 
much  of  said  tax  against  insolvent  State  and  savings  banks  as  shall 
be  found  to  affect  the  claims  of  their  depositors.  (Act  March  1, 
1879,  Ch.  125,  Sec.  22;  20  Stat.  U.  S.  351.) 

Johnson  v.  United  States,  17  Court  of  Claims  Reports,  157. 

§  140.  When  Cixculating  Notes  Exempt  from  Tax. — ^Whenever 
the  outstanding  circulation  of  any  bank,  association,  corporation, 
company,  or  person  is  reduced  to  an  amount  not  exceeding  five  per 
centum  of  the  chartered  or  declared  capital  existing  at  the  time  the 
same  was  issued,  said  circulation  shall  be  free  from  taxation;  and 
whenever  any  bank  which  has  ceased  to  issue  notes  for  circulation, 
deposits  in  the  Treasury  of  the  United  States,  in  lawful  money, 
the  amount  of  its  outstanding  circulation,  to  be  redeemed  at  par, 
under  such  regulations  as  the  Secretary  of  the  Treasury  shall  pre- 
scribe, it  shall  be  exempt  from  any  tax  upon  such  circulation. 
(Rev.  Stat.  U.  S.  Sec.  3411.) 

This  section  refers  to  State  as  well  as  National  banks.  State  bank 
circulation  has  now  been  mostly  if  not  entirely  retired,  and  National 
banks  ceasing  to  issue  circulating  notes  generally  deposit  lawful  money. 

§  141.  Tax  on  Notes  of  State  Banks,  etc.,  Used  for  Circulation. 
— ^Every  National  banking  association,  State  bank,  or  State  banking 
association  shall  pay  a  tax  of  ten  per  centum  on  the  amount  of 
notes  of  any  person,  or  of  any  State  bank,  or  State  banking  asso- 
ciation, used  for  circulation  and  paid  out  by  them.  (Rev.  Stat.  U. 
S.  Sec.  3412.) 

§  142.  Tax  on  Notes  of  Cities,  etc.,  Used  for  Circulation. — Every 
National  banking  association.  State  bank,  or  banker,  or  association, 
shall  pay  a  tax  of  ten  per  centum  on  the  amount  of  notes  of  any 
town,  city,  or  municipal  corporation,  paid  out  by  them.  (Rev. 
Stat.  U.  S.  Sec.  3413.) 

§  143.  Monthly  Eetnms  of  Notes  of  State  Banks,  Cities,  etc., 
Used. — A  true  and  complete  return  of  the  monthly  amount  of  cir- 
culation, of  deposits,  and  of  capital,  as  aforesaid,  and  of  the 


137 

monthly  amount  of  notes  of  persons,  town,  city,  or  municipal  cor- 
porations. State  banks,  or  State  banking  associations  paid  out  as 
aforesaid  for  the  previous  six  months,  shall  be  made  and  rendered 
in  duplicate  on  the  first  day  of  December  and  the  first  day  of  June, 
by  each  of  such  banks,  associations,  corporations,  companies,  or 
persons  with  a  declaration  annexed  thereto  under  the  oath  of 
such  person,  or  of  the  president  or  cashier  of  such  bank,  asso- 
ciation, corporation,  or  company,  in  such  form  and  manner  as  may 
be  prescribed  by  the  Commissioner  of  Internal  Eevenue,  that  the 
same  contains  a  true  and  faithful  statement  of  the  amounts  subject 
to  tax,  as  aforesaid;  and  one  copy  shall  be  transmitted  to  the  col- 
lector of  the  district  in  which  any  such  bank,  association,  corpora- 
tion, or  company  is  situated,  or  in  which  such  person  has  his  place 
of  business,  and  one  copy  to  the  Commissioner  of  Internal  Eevenue. 
(Rev.  Stat.  U.  S.  Sec.  3414.) 

It  is  believed  that  no  notes  of  the  description  mentioned  are  now 
issued. 

§  144.  In  Default  of  Ketums,  Commissioner  to  Estimate. — In 
default  of  the  returns  provided  in  the  preceding  section,  the 
amount  of  circulation,  deposit,  capital,  and  notes  of  persons,  town, 
city,  and  municipal  corporations.  State  banks,  and  State  banking 
associations  paid  out,  as  aforesaid,  shall  be  estimated  by  the  Com- 
missioner of  Internal  Revenue,  upon  the  best  information  he  can 
obtain.  And  for  any  refusal  or  neglect  to  make  return  and  payment, 
any  such  bank,  association,  corporation,  company,  or  person  so  in 
default  shall  pay  a  penalty  of  two  hundred  dollars,  besides  the  addi- 
tional penalty  and  forfeitures  provided  in  other  cases.  (Rev.  Stat. 
U.  S.  Sec.  3415.) 

§  145.  Returns  for  Converted  State  Bank. — Whenever  any  State 
bank  or  banking  association  has  been  converted  into  a  National 
banking  association,  and  such  National  banking  association  has 
assumed  the  liabilities  of  such  State  bank  or  banking  association, 
including  the  redemption  of  its  bills,  by  any  agreement  or  under- 
standing whatever  with  the  representatives  of  such  State  bank  or 
banking  association,  such  National  banking  association  shall  be 
held  to  make  the  required  return  and  payment  on  the  circulation 


138 

outstanding,  so  long  as  such  circulation  shall  exceed  five  per  centum 
of  the  capital  before  such  conversion  of  such  State  bank  or  bank- 
ing association.     (Rev.  Stat.  U.  S.  Sec.  3416.) 

There  are  now  no  cases  under  this  section. 

§  146.  Certain  Provisions  Not  to  Apply  to  National  Banks. — 

The  provisions  of  this  chapter,  relating  to  the  tax  on  the  deposits, 
capital,  and  circulation  of  banks,  and  to  their  returns,  except  as 
contained  in  sections  thirty-four  hundred  and  ten,  thirty-four 
hundred  and  eleven,  thirty-four  hundred  and  twelve,  thirty-four 
hundred  and  thirteen,  and  thirty-four  hundred  and  sixteen,  and 
such  parts  of  sections  thirty-four  hundred  and  fourteen  and  thirty- 
four  hundred  and  fifteen  as  relate  to  the  tax  of  ten  per  centum  on 
certain  notes,  shall  not  apply  to  associations  which  are  taxed  under 
and  by  virtue  of  Title,  "  National  Banks.''  (Rev  Stat.  U.  S. 
Sec.  3417.) 

The  constitutionality  of  the  taxes  imposed  by  the  preceding  sections 
has  been  sustained  by  the  Supreme  Court  of  the  United  States.  (Veazie 
Bank  v.  Fenno,  8  Wallace,  533;  Merchants'  National  Bank  v.  United 
States,  101  U.  S.,  1.)  In  Veazie  Bank  v.  Fenno  it  was  said:  "Having 
thus  in  the  exercise  of  undisputed  constitutional  powers  undertaken  to 
provide  a  currency  for  the  whole  country,  it  can  not  be  questioned  that 
Congress  may,  constitutionally,  secure  the  benefit  of  it  to  the  people  by 
appropriate  legislation.  To  this  end  Congress  has  denied  the  quality  of 
legal  tender  to  foreign  coins,  and  has  provided  by  law  against  the  im- 
position of  counterfeit  and  base  coin  on  the  community.  To  the  same 
end  Congress  may  restrain,  by  suitable  enactments,  the  circulation  as 
money  of  any  notes  not  issued  under  its  own  authority.  Without  this 
power,  indeed,  its  attempts  to  secure  a  sound  and  uniform  currency  for 
the  country  must  be  futile."  These  taxes  are  not  direct  taxes.  ( See  cases 
cited  above.) 

§  147.  State  Taxation  of  Shares  of  Stock  and  Real  Estate. — Noth- 
ing herein  shall  prevent  all  the  shares  in  any  association  from  being 
included  in  the  valuation  of  the  personal  property  of  the  owner  or 
holder  of  such  shares,  in  assessing  taxes  imposed  by  authority  of 
the  State  within  which  the  association  is  located;  but  the  Legis- 
lature of  each  State  may  determine  and  direct  the  manner  and  place 
of  taxing  all  the  shares  of  National  banking  associations  located 
within  the  State,  subject  only  to  the  two  restrictions,  that  the  taxa- 


139 

tion  shall  not  be  at  a  greater  rate  than  is  assessed  upon  other 
moneyed  capital  in  the  hands  of  individual  citizens  of  such  State, 
and  that  the  shares  of  any  National  banking  association  owned  by 
non-residents  of  any  State  shall  be  taxed  in  the  city  or  town  where 
the  bank  is  located,  and  not  elsewhere.  Nothing  herein  shall  be 
construed  to  exempt  the  real  property  of  associations  from  either 
State,  county  or  municipal  taxes,  to  the  same  extent,  according  to 
its  value,  as  other  real  property  is  taxed.  (Rev.  Stat.  XJ.  S.  Sec. 
6219.) 

Taxes  Authorized  by  this  Section  Exclusive. — The  taxes  which  the 
States  are  authorized  by  this  section  to  impose  are  exclusive,  and  the 
National  banks  are  not  liable  to  any  other  tax  imposed  under  State 
authority.  (National  State  Bank  of  Oskaloosa  v.  Young,  25  Iowa,  311.) 
And  the  provision  in  Section  5214,  Rev.  Stat.  U.  S.,  "  in  lieu  of  all 
existing  taxes,"  includes  all  State,  county  and  municipal  taxes.     (Id.) 

Taxes  Upon  the  Shares — Difference  Between  Shares  and  Capital 
Stock. — The  personal  property  of  a  National  bank  can  not  be  directly 
assessed  for  taxation  by  State  authority.  (City  and  County  of  San 
Francisco  v.  Crocker-Woolworth  National  Bank,  92  Fed.  Rep.,  273.) 
The  taxes  which  the  States  are  authorized  to  impose  are  taxes  upon  the 
shares  of  stock  in  the  hands  of  the  stockholders.  Such  taxes  are  not 
the  same  as  taxes  upon  the  capital  of  the  bank.  (Van  Allen  v.  The 
Assessors,  3  Wall.,  573.)  "  The  interest  of  the  shareholder  entitles  him 
to  participate  in  the  net  profits  earned  by  the  bank  in  the  employment  of 
its  capital,  during  the  existence  of  its  charter,  in  proportion  to  the  num- 
ber of  his  shares,  and,  upon  its  dissolution  or  termination,  to  his 
proportion  of  the  property  that  may  remain  of  the  corporation  after 
the  payment  of  its  debts.  This  is  a  distinct  independent  interest  or 
property,  held  by  the  shareholder  like  any  other  property  that  may  be- 
long to  him.  Now,  it  is  this  interest  which  the  act  of  Congress  has  left 
subject  to  taxation  by  the  States,  under  the  limitations  prescribed." 
(Id.)  Where  new  shares  are  issued  they  can  not  be  taxed  until  the 
increase  is  approved  by  the  Comptroller  of  the  Currency.  (Charleston  v. 
People's  National  Bank,  5  S.  C,  103,)  The  shares  are  taxable  without 
regard  to  their  ownership,  and  where  a  National  bank  owns  stock  in 
another  National  bank,  it  may  be  taxed  thereon.  (Bank  of  Redemption 
V.  Boston,  126  U.  S.,  60.) 

To  Whom  Assessed. — As  the  tax  can  be  only  on  the  shares  they  must 
be  assessed  to  the  shareholders  in  their  names,  and  not  in  the  name  of 
the  bank.  (Miller  v.  First  National  Bank  of  Cincinnati,  46  Ohio  St., 
424.)    And  an  assessment  of  the  capital  stock  as  the  personal  property 


140 

of  the  bank  without  mention  of  the  shareholders  is  void.  (Farmers* 
and  Traders'  National  Bank  v.  Hoffman,  93  Iowa,  119.)  And  the  shares 
cannot  be  assessed  in  solido  against  the  bank.  (First  National  Bank  of 
Leoti  V.  Fisher.  45  Kan.,  726;  National  Bank  of  Virginia  v.  City  of  Rich- 
mond, 42  Fed.  Rep.,  877;  Citizens'  Bank  of  Louisiana  v.  Board  of  As- 
sessors, 52  Fed.  Rep.,  73;  Whitney  National  Bank  v.  Parker,  41  Fed. 
Rep.,  402.  But  see  First  National  Bank  of  Aberdeen  v.  Chehalis  County, 
6  Wash.,  64.)  But,  as  we  shall  see  hereafter,  the  bank  may  be  re- 
quired to  pay  the  tax  for  its  shareholders. 

Meaning  of  the  Tebm  "Moneyed  Capital." — The  provision  that  the 
taxation  shall  not  be  at  a  greater  rate  than  is  assessed  upon  other 
moneyed  capital  in  the  hands  of  individual  citizens  is  to  be  construed  in 
the  light  of  the  purpose  and  object  of  Congress.  The  main  purpose 
was  to  render  impossible  for  the  States,  in  levying  taxes,  to  create  and 
foster  an  unequal  and  unfriendly  competition,  by  favoring  institutions 
or  individuals  carrying  on  a  similar  business,  and  operations  and  in- 
vestments of  a  like  character.  The  meaning  of  the  term  "  moneyed 
capital "  must,  therefore,  be  limited  to  such  capital  as  comes  into  com- 
petition with  the  National  banks.  It  '*  includes  shares  of  stock  or  other 
interests  owned  by  individuals  in  all  enterprises  in  which  the  capi- 
tal employed  in  carrying  on  its  business  is  money,  where  the  ob- 
ject of  the  business  is  the  making  of  profit  by  the  use  of  money.  The 
money  capital  thus  employed  is  invested  for  that  purpose  in  securities 
by  way  of  loan,  discount,  or  otherwise,  which  are  from  time  to  time, 
according  to  the  rules  of  the  business,  reduced  again  to  money  and  re- 
invested. In  this  way  the  moneyed  capital  in  the  hands  of  individuals 
is  distinguished  from  what  is  known  generally  as  personal  property. 
*  *  *  But  *  moneyed  capital '  does  not  mean  all  capital  the  value  of 
which  is  measured  in  terms  of  money.  In  this  sense,  all  kinds  of  real 
and  personal  property  would  be  embraced  by  it,  for  they  all  have  an 
estimated  value  as  the  subjects  of  sale.  Neither  does  it  necessarily  in- 
clude all  forms  of  investment  in  which  the  interest  of  the  owner  is 
expressed  in  money.  Shares  of  stock  in  railroad  companies,  mining 
companies,  manufacturing  companies,  and  other  corporations,  are  rep- 
resented  by  certificates  showing  that  the  owner  is  entitled  to  titerest, 
expressed  in  money  value,  in  the  entire  capital  and  property  of  the 
corporation,  but  the  property  of  the  corporation  which  constitutes  its 
invested  capital  may  consist  mainly  of  real  and  personal  property, 
which,  in  the  hands  of  individuals,  no  one  would  think  of  calling 
moneyed  capital,  and  its  business  may  not  consist  in  any  kind  of  dealing 
in  money,  or  commercial  representative  of  money.  So  far  as  the  policy 
of  the  Grovernment  in  reference  to  National  banks  is  concerned,  it  is 
indifferent  how  the  State  may  choose  to  tax  such  corporations  as  those 
just  mentioned,  or  the  interest  of  individuals  in  them,  or  whether  they 
should  be  taxed  at  all.     Whether  property  interests  in  railroads,  in 


141 

manufacturing  enterprises,  in  mining  investments,  and  others  of  that 
description  are  taxed  or  exempt  from  taxation  in  the  contemplation  of 
the  law,  would  have  no  effect  upon  the  success  of  National  banks. 
There  is  no  reason,  therefore,  to  suppose  that  Congress  intended,  in 
respect  to  these  matters,  to  interfere  with  the  power  and  policy  of  the 
States.  The  business  of  banking,  as  defined  by  law  and  custom,  consists 
in  the  issue  of  notes  payable  on  demand,  intended  to  circulate  as  money, 
where  the  banks  are  banks  of  issue,  in  receiving  deposits  payable  on  de- 
mand, in  discounting  commercial  paper,  making  loans  of  money  on  col- 
lateral security,  buying  and  selling  bills  of  exchange,  negotiating  loans, 
and  dealing  in  negotiable  securities  issued  by  the  Government,  State, 
National  and  municipal  and  other  corporations.  These  are  the  opera- 
tions in  which  the  capital  invested  in  National  banks  is  employed, 
and  it  is  the  nature  of  that  employment  which  constitutes  it  in  the 
eye  of  this  statute  'moneyed  capital/  Corporations  and  individuals 
carrying  on  these  operations  do  come  into  competition  with  the  busi- 
ness of  National  banks,  and  capital  thus  employed  is  what  is  intended 
to  be  described  by  the  act  of  Congress."  (Mercantile  National  Bank  v. 
New  York,  121  U.  S.,  138;  Talbott  v.  Silver  Bow  County,  139  U.  S.,  438; 
Palmer  v.  McMahon,  133  U.  S..  660;  Bank  of  Redemption  v.  Boston,  125 
U.  S.,  60;  First  National  Bank  v.  Chapman,  173  U.  S.,  205;  Commercial 
National  Bank  v.  Chambers,  182  U.  S.,  556.) 

Accordingly,  it  has  been  held  by  the  United  States  Supreme  Court 
that  the  exemption  from  taxation  of  shares  of  stock  in  corporations,  the 
business  of  which  does  not  come  into  competition  with  that  of  the 
National  banks,  is  not  a  discrimination  against  National  banks  within 
the  intendment  of  the  law;  and  that  the  fact  that  a  less  rate  of  tax,  or 
no  tax  at  all,  is  imposed  upon  such  corporations  as  railroad  companies, 
manufacturing  companies,  mining  companies,  and  insurance  companies 
does  not  invalidate  the  tax  upon  National-bank  stock.  (Mercantile  Na- 
tional Bank  v.  New  York,  121  U.  S.,  138.)  And  in  a  recent  case  in  the 
Supreme  Court  it  was  held  that  the  powers  conferred  upon  Trust  Com- 
panies by  the  laws  of  New  York  do  not  call  for  any  limitation  of  the 
decision  in  Mercantile  National  Bank  v.  New  York;  and  such  institu- 
tions are  not  in  any  proper  sense  banking  institutions  within  the  in- 
tendment of  this  section.  (Jenkins  v.  NefC,  186  U.  S.,  230;  S.  C,  163 
N.  Y.,  320.) 

And  a  tax  upon  National-bank  stock  is  not  void,  even  though  the 
State  statute  exempts  from  taxation  the  stock  of  many  corporations  the 
entire  capital  of  which  is  invested  in  assessable  property  in  the  State, 
and  though  some  of  the  property  of  such  corporations,  not  moneyed 
capital,  is  not  assessed  at  all,  or  at  a  lower  rate  than  bank  stock.  (Tal- 
bott V.  Silver  Bow  County,  139  U.  S.,  441.) 

What  is  Meant  by  "  Greater  Rate." — Any  system  of  assessment  of 
taxes  which  exacts  from  the  owner  of  the  shares  of  a  National  bank 


142 

a  larger  sum  in  proportion  to  the  actual  value  of  those  shares  than  it 
does  from  other  moneyed  capital,  valued  in  like  manner,  taxes  the 
shares  at  a  greater  rate,  notwithstanding  that  the  percentage  of  tax  on 
the  valuation  is  the  same  as  that  applied  to  other  monej^ed  capital. 
(Pelton  V.  Commercial  National  Bank,  101  U.  S.,  143;  see  also  Whitbeck 
V.  Mercantile  Bank,  127  U.  S.,  193.)  But  where  there  is  no  discrimina- 
tion against  National  bank  stock  in  favor  of  other  personal  property, 
the  fact  that  the  assessment  for  taxation  upon  personal  estate  is  at  a 
higher  ratio  of  valuation  than  upon  real  estate  is  no  ground  for  the 
intervention  of  a  court  of  equity  at  the  instance  of  a  National  bank. 
(Mercantile  National  Bank  v.  Mayor,  172  N.  Y.,  35.) 

Valuation  of  Shabes. — In  estimating  the  value  of  the  shares,  all 
the  property  and  assets  of  the  bank  may  be  taken  Into  consideration 
unless  such  property  is  taxed  separately.  (St.  Louis  National  Bank  v. 
Papin,  3  Cent.  L.  J.,  669;  1  Nat.  Bank  Cas.,  326;  Stafford  National 
Bank  v.  Davis,  59  N.  H.,  38.)  And  it  has  been  held  that  where  shares 
are  taxed  at  their  par  value,  the  surplus  fund  may  be  taxed  separately 
if  it  is  not  invested  in  Federal  securities.  (First  National  Bank  v. 
Peterborough,  56  N.  H.,  38;  North  Ward  National  Bank  v.  City  of 
Newark,  39  N.  J.  Law,  380.  But  see  National  State  Bank  v.  Young,  25 
Iowa,  311;  County  Commissioners  v.  Farmers'  and  Mechanics'  National 
Bank,  48  Md.,  117).  If  the  shares  are  assessed  at  their  actual  cash 
value  without  any  deduction  for  real  estate,  the  latter  should  not  be 
taxed  separately.  (Commissioners  of  Rice  County  v.  Citizens'  National 
Bank  of  Faribault,  23  Minn.,  280.)  As  the  tax  is  upon  the  shares  and 
not  upon  the  capital  stock,  it  is  not  necessary  that  any  deduction  should 
be  made  for  that  portion  of  the  capital  which  is  invested  in  United 
States  bonds  or  other  non-taxable  securities.  (Van  Allen  v.  The  As- 
sessors, 3  Wall.,  573;  Mechanics'  National  Bank  v.  Baker,  65  N.  J.  Law, 
113.) 

In  fixing  the  actual  value  of  shares  of  bank  stock  for  the  punwse  of 
taxation,  the  real  estate  of  the  bank  is  to  be  taken  at  its  actual  value, 
notwithstanding  it  is  assessed  at  a  lower  valuation.  (Jenkins  v.  Neff, 
163  N.  Y..  320.)  Under  the  statutes  of  Indiana  the  real  estate  owned 
by  a  National  bank  is  not  to  be  included  in  the  valuation  of  the  shares 
of  stock  for  purposes  of  taxation.  (Board  of  Commissioners  of  Morgan 
County  V.  First  National  Bank,  57  N.  B.  Rep.,  728.)  But  where  the  real 
estate  has  been  so  included,  and  the  bank  has  also  paid  a  tax  upon  the 
real  estate  as  such,  the  latter  tax  can  not  be  recovered  by  the  bank; 
for  the  wrong  done  was  in  the  over-valuation  of  the  stock,  and  not  in 
the  assessment  of  the  real  estate  to  the  bank.  {Id.)  As  to  the  rule  in 
New  Jersey,  see  Bank  v.  Williams  (58  N.  J,  Law,  45),  Mechanics'  Na- 
tional Bank  v.  Baker  (65  N.  J.  Law,  113), 


143 

Exemptions. — In  Adams  v.  Nashville  (95  U.  S.,  19)  it  was  said  by  the 
Supreme  Court,  "  the  act  of  Congress  was  not  intended  to  curtail  the 
State  power  on  the  subject  of  taxation.  It  simply  required  that  capital 
invested  in  National  banks  should  not  be  taxed  at  a  greater  rate  than 
like  property  similarly  invested.  It  was  not  intended  to  cut  off  the 
power  to  exempt  particular  kinds  of  property  if  the  legislature  chose 
to  do  so."  Accordingly,  it  has  been  held  by  that  court  that  a  partial 
exemption  of  other  moneyed  capital  will  not  deprive  the  State  of  the 
power  to  levy  a  tax  on  National  bank  stock.  (Hepburn  v.  School  Di- 
rectors, 23  Wall.,  480;  see  also  Washington  National  Bank  v.  King 
County,  9  Wash.,  607.)  Thus  bonds  issued  by  a  State,  or  under  its 
authority,  by  its  public  municipal  bodies,  although  they  undoubtedly 
represent  moneyed  capital,  may  be  exempted  without  this  effect,  since 
they  are  not  ordinarily  the  subject  of  taxation.  (Mercantile  Bank  v. 
New  York,  121  U.  S.,  138.)  So  the  State  may  exempt  savings-bank 
deposits  (Id.),  or  the  credits  of  individuals  such  as  accounts,  promis- 
sory notes,  and  mortgages.  (First  National  Bank  v.  Chehalis  Co.,  6 
Wash.,  64.)  But  all  exemptions  must  be  founded  upon  just  reason, 
and  not  operate  as  an  unfriendly  discrimination  against  investments  in 
National  bank  shares.  (Id.)  Where  the  exemptions  in  favor  of  other 
moneyed  capital  are  so  palpable  as  to  show  that  there  is  a  serious  dis- 
crimination against  capital  invested  in  the  shares  of  National  banks, 
the  tax  upon  such  shares  will  be  declared  invalid.  (Boyer  v.  Boyer, 
113  U.  S.,  690.)  And  where  a  tax  is  imposed  on  the  market  value  of 
the  shares  of  a  National  bank  without  allowance  of  any  deduction 
for  the  non-taxable  securities  and  specifically  taxed  property  held  by 
the  bank,  and  where  it  is  also  so  assessed  that  the  owners  of  shares  thus 
taxed  are  deprived  of  the  privilege  allowed  other  moneyed  capitalists 
of  deducting  from  the  amount  of  securities  held  by  them  the  amount 
of  bonds,  securities,  liquidated  claims  and  demands  due  from  them 
respectively  to  others,  such  a  tax  violates  the  provisions  of  the  Statutes 
of  the  United  States,  and  is  void.  (The  First  National  Bank  of  Rich- 
mond V.  The  City  of  Richmond,  39  Fed.  Rep.,  389.)  If  in  the  practical 
execution  of  a  State  tax  law  it  is  found  impracticable  to  list  more 
than  a  small  portion  of  the  property  subject  to  taxation,  other  than 
National  bank  shares,  the  National  banks  may  demand  such  forms  of 
relief  as  will  protect  the  shareholders  from  paying  a  greater  rate  of 
taxation  than  is  imposed  on  individual  citizens.  (First  National  Bank 
V.  Lindsay,  45  Fed.  Rep.,  619.) 

Deductions. — Stockholders  of  the  National  banks  must  be  allowed  the 
same  deductions  from  the  assessment  against  them  upon  their  shares 
of  stock  that  are  allowed  to  the  other  taxpayers  in  the  State  on  their 
moneyed  capital.  (People  v.  Weaver,  100  U.  S.,  539,  reversing  S.  C, 
67  N.  Y.,  516,  and  overruling  People  v.  Dolan,  36  N.  Y.,  59.)  And  if 
the  owners  of  other  moneyed  capital  are  permitted  to  deduct  from  the 


144 

assessed  value  thereof  the  amount  of  debts  which  they  owe,  the  same 
privilege  must  be  allowed  to  the  holders  of  National  bank  stock. 
(People  V.  Weaver,  100  U.  S.,  539;  Britton  v.  Evansville  National  Bank, 
105  U.  S.,  322;  Supervisors  v.  Stanley,  105  U.  S.,  305;  First  National 
Bank  of  Leoti  v.  Fisher,  45  Kans,,  726;  Mercantile  National  Bank  v. 
Shields,  59  Fed.  Rep.,  952.)  And  the  mode  of  assessment  must  be 
such  that  these  deductions  can  be  made;  and,  therefore,  an  assessment 
of  all  the  shares  against  the  bank  in  solido  which  would  preclude  such 
deductions,  would  be  void.  (First  National  Bank  v.  City  of  Richmond, 
39  Fed.  Rep.,  309.)  But  it  is  immaterial  that  such  deductions  are  al- 
lowed to  holders  of  stock  in  railroad,  insurance  and  manufacturing  cor- 
porations, since  such  stock  is  not  regarded  as  "  moneyed  capital."  (Mer- 
cantile National  Bank  v.  Shields,  59  Fed.  Rep.,  952.)  Non-resident 
stockholders  are  entitled  to  the  same  deductions  as  resident  stock- 
holders. (Id.;  Town  of  Farmington  v.  Downing,  67  N.  H.,  441.)  Where 
the  laws  of  a  State  require  National  bank  shares  to  be  assessed  for 
taxation  at  their  real  value,  it  is  not  a  discrimination  against  these 
banks  that  private  banks  are  permitted  to  deduct  the  amount  of  their 
deposits  from  their  taxable  assets,  and  this  privilege  is  withheld  from 
National  banks,  for  the  general  deposits  are  debts  against  the  bank, 
and  the  real  value  of  the  shares  depends  upon  the  value  of  the  bank's 
franchise,  capital  and  property  of  all  kinds,  less  the  amount  of  its 
debts.  (Engelke  v.  Schlender,  75  Tex.,  559.)  Under  the  statutes  of 
Virginia  a  stockholder  in  a  National  bank  is  not  entitled  to  have  his  in- 
debtedness deducted  from  the  value  of  his  stock  before  it  is  assessed 
for  taxation.     (Burrows  v.  Smith,  95  Va.,  694.) 

Non-taxable  Propebty. — The  intention  of  Congress  was  that  the  rate 
of  taxation  should  be  the  same  as,  or  not  greater  than,  the  tax  upon 
moneyed  capital,  which  is  subject  and  liable  to  taxation,  and  which  the 
State  has  the  capacity  to  tax.  (People  v.  Commissioners,  4  Wall.,  241  j 
Lionberger  v.  Rouse,  9  Wall.,  468.)  It  is,  therefore,  no  ground  of  ob- 
jection to  the  validity  of  a  tax  on  National  bank  stock  that,  while  de- 
ductions are  made  from  the  personal  estates  of  individuals  and  the 
capital  of  State  corporations  for  the  Grovernment  bonds  owned  by  them, 
no  such  deduction  is  made  on  account  of  the  capital  of  National  banks 
invested  in  such  bonds,  or  that  private  bankers  are  allowed  to  deduct 
legal  tender  notes,  and  no  deduction  is  allowed  for  such  notes  held  by 
National  banks.  (Adair  v.  Robinson,  6  Tex.,  Civ.  App.,  275;  People  v. 
Commissioners,  supra.)  And  where  a  State  had  previously  contracted 
with  the  banks,  which  it  had  chartered,  that  they  should  not  be  taxed 
above  a  certain  rate,  it  was  held  by  the  Supreme  Court  that  a  tax  on 
National  bank  stock  at  a  greater  rate  is  not  invalid,  if  this  rate  is  not 
greater  than  that  assessed  upon  all  moneyed  capital  within  the  State, 
except  that  of  the  State  banks.     (Lionberger  v.  Rouse,  9  Wall.,  468.) 


145 

Real  Estate  in  Other  States. — The  National  Bank  Act  does  not  re- 
quire that  real  estate  situated  outside  of  the  State  in  which  the  bank  is 
located  shall  be  excluded  in  estimating  the  value  of  the  shares  for  pur- 
poses of  taxation.  (Commercial  National  Bank  v.  Chambers,  182  U.  S., 
556.) 

Mode  in  Which  State  Banks  Must  Be  Taxed. — Where  the  State 
banks  are  taxed  upon  the  capital,  no  tax  can  be  imposed  upon  the 
shares  of  National  banks,  for  as  the  capital  of  the  State  banks  may- 
consist  of  bonds  of  the  United  States  which  are  exempt  from  taxation, 
a  tax  on  capital  is  not  equivalent  to  a  tax  on  shares.  (Van  Allen  v.  The 
Assessors,  3  Wall.,  573;  Bradley  v.  The  People,  4  Wall.,  459.)  But 
though  the  tax  upon  the  State  banks  is  not  eo  nomine  a  tax  on  shares, 
yet  if  it  is  equivalent  to  such  a  tax,  the  shares  in  the  National  banks 
located  in  that  State  may  be  taxed.  (Frazer  v.  Seibern,  16  Ohio  St., 
614;  Van  Slyke  v.  State,  26  Wis.,  655;  Boynoll  v.  State,  25  Wis.,  112.) 
But  Congress  meant  no  more  than  to  require  of  the  States,  as  a  condi- 
tion to  the  exercise  of  the  power  to  tax  the  shares  in  National  banks, 
that  they  should,  as  far  as  they  had  the  capacity,  tax  in  like  manner 
the  shares  of  banks  of  their  own  creation.  (Lionberger  v.  Rouse,  9 
Wall.,  468.)  Therefore,  where  a  State  has  previousely  contracted  with 
the  banks  which  it  has  chartered  that  they  should  not  be  taxed  above  a 
certain  rate,  a  tax  upon  National  bank  shares  at  a  greater  rate  is  not 
invalid,  if  this  rate  is  not  greater  than  that  assessed  upon  all  the 
moneyed  capital  within  the  State,  except  that  of  the  State  banks.  (Id.; 
City  of  Richmond  v.  Scott,  48  Ind.,  568.) 

State  Constitution. — The  taxation  upon  National  bank  shares  by 
States  must  be  characterized  by  such  equality  and  uniformity  as  is 
required  by  the  State  constitution  for  the  protection  of  individual 
citizens  having  moneyed  capital.  (First  National  Bank  v.  Lindsay,  45 
Fed.  Rep.,  619.)  National  and  State  banks  in  Kentucky  are  subject  to 
county  and  municipal  taxation.  (Deposit  Bank  of  Owensboro  v.  Daviess 
County,  102  Ky.,  174.)  And  the  acceptance  by  the  banks  of  the  act 
known  as  the  "  Hewitt  Law  "  does  not  preclude  the  State  from  subject- 
ing them  to  other  modes  of  taxation.     (Id.) 

Taxation  by  Terbitobies. — Although  the  word  "  territory "  is  not 
mentioned  specifically  in  the  statute,  the  Territories  have  the  same 
power  of  taxation  of  National  banks  that  the  States  have.  (Talbott  v. 
Silver  Bow  Co.,  139  U.  S.,  441.) 

Insolvent  National  Bank. — ^The  personal  property  of  an  insolvent 
National  bank  in  the  hands  of  a  receiver  appointed  by  the  Comptroller 
of  the  Currency  is  exempt  from  taxation  under  State  laws.  (Rosen- 
blatt V.  Johnston,  104  U.  S.,  462;  see  Woodward  v.  Ellsworth,  4  Colo., 


146 

580.)  And  where  a  National  bank  has  become  insolvent  and  the  prop- 
erty representing  the  capital  stock  has  been  swept  away,  no  tax  on  the 
shares  can  be  collected  from  the  receiver  under  a  statute  requiring  a 
tax  to  be  paid  by  the  bank.  (City  of  Boston  v.  Beal,  55  Fed.  Rep.,  26; 
S.  C,  51  Fed.  Rep.,  306.) 

State  Bank  Convebted  into  National  Bank. — While  a  State  bank  is 
changing  to  a  National  bank,  and  before  the  requirements  of  the  State 
statute  are  fully  complied  with,  it  is  subject  to  State  taxation.  (Com- 
monwealth V.  Manufacturers'  and  Mechanics'  Bank  of  Philadelphia,  2 
Pearson's  Decisions,  386;  2  Nat.  Bank  Cas.,  459.) 

Bbanch  Bank. — A  National  bank  located  in  New  Jersey,  for  the  con- 
venience of  persons  in  Philadelphia,  kept  a  clerk  in  that  city  who  re- 
ceived deposits:  Held,  That  the  bank  did  not  become  located  in  Phila- 
delphia so  as  to  be  liable  to  taxation.  (National  State  Bank  of  Camden 
V.  Pierce,  18  Albany  Law  Journal,  16;  2  Nat.  Bank  Cas.,  177.) 

Repobt  to  Compteolleb  Not  Evidence  of  Value  of  Shares. — The 
written  report  of  the  officers  of  a  National  bank  to  the  Comptroller  of 
the  Currency,  made  pursuant  to  Section  5211,  Rev.  St.  U.  S.,  does  not 
purport  to  give  the  actual  or  estimated  value  of  the  bank's  property, 
and  is  incompetent,  alone,  as  a  basis  from  which  to  deduce  the  actual 
value  of  the  bank's  stock.     (Patterson  v.  Plummer,  10  N.  D.,  95.) 

License  Tax — Tax  on  Circulating  Notes. — ^Neither  the  State  nor 
its  municipalities  can  impose  a  license  or  privilege  tax  upon  the  Na- 
tional banks.  (Mayor  v.  First  National  Bank,  59  Ga.,  648;  City  of 
Carthage  v.  First  National  Bank,  71  Mo.,  508;  National  Bank  of  Chat- 
tanooga V.  Mayor,  8  Heiskell  (Tenn.),  814.)  As  to  whether  the  States 
could  tax  the  circulating  notes  of  the  National  banks  the  decisions 
were  in  conflict.  In  North  Carolina  (Lilly  v.  Board  of  Commissioners, 
69  N.  C,  300;  Ruffin  v.  Board  of  Commissioners,  69  N.  C,  498)  and 
Indiana  (Board  of  Commissioners  v.  Elston,  32  Ind.,  37)  it  was  held 
that  such  a  tax  was  invalid,  while  in  Mississippi  the  contrary  was 
held.  (Home  v.  Greene,  52  Miss.,  452.)  But  now  by  the  act  of  Con- 
gress approved  August  13,  1894,  such  tax  is  expressly  authorized.  See 
next  section. 

Collection  of  Taxes. — ^While  the  tax  is  upon  th€  shares  it  is  usually 
collected  from  the  banks,  they  paying  for  their  shareholders.  The 
right  of  the  States  to  collect  the  tax  in  this  manner  has  been  sustained 
by  the  United  States  Supreme  Court.  (National  Bank  v.  Common- 
wealth, 9  Wall.,  353.)  But  the  bank  is  not  absolutely  liable  for  the  tax 
upon  the  shares;  to  render  it  liable  it  must  be  shown  to  have, 
or  have  had,  dividends  or  other  property  belonging  to  the  shareholders. 


147 

(Farmers'  and  Traders'  National  Bank  v.  Hoffman,  93  Iowa,  191;  s6^, 
also,  Hershlre  v.  First  National  Bank,  35  Iowa,  272.  But  see  First 
National  Bank  v.  Douglas  County,  3  Dill.,  330.)  A  State  may  require 
the  officers  of  National  banks  located  within  its  territory  to  transmit 
lists  of  its  stockholders  to  the  taxing  officers  of  the  various  towns  and 
villages  in  which  th«  stockholders  who  are  residents  reside.  (Waite  v. 
Dowly,  94  U.  S.,  527.  But  see  First  National  Bank  of  Youngstown  v. 
Hughes,  2  Nat.  Bank  Cas.,  176.)  And  State  courts  have  jurisdiction  to 
compel  the  officers  of  National  banks  by  mandamus  to  exhibit  to  the 
county  assessors  the  list  of  the  shareholders  in  their  banks;  and  to  this 
end  it  is  not  necessary  the  statute  should  be  supplemented  by  State 
legislation.  (Paul  v.  McGrau,  3  Wash.  St.,  296.)  Where  a  National 
bank  has  become  insolvent  and  the  property  representing  the  capital 
stock  has  been  swept  away,  no  tax  on  the  shares  can  be  collected  from 
the  receiver  under  a  statute  requiring  the  tax  to  be  paid  by  the  bank. 
(City  of  Boston  v.  Beal,  51  Fed.  Rep.,  306;  S.  C,  55  Fed.  Rep.,  26.) 

Agreement  of  Bank  to  Pay  Taxes. — An  agreement  by  a  National 
bank  to  pay  taxes  on  its  stock  to  it,  and  assessed  at  the  time  against 
the  sellers,  in  consideration  of  being  allowed  to  retain  the  dividends 
and  surplus,  is  not  illegal,  although  the  taxes  are  not  properly  assessed. 
(Lull  V.  Anamosa  National  Bank,  110  Iowa,  537.) 

Remedy  fob  Illegal  Taxation. — If  the  tax  is  for  any  reason  illegal 
the  bank  may,  on  behalf  of  its  stockholders,  maintain  a  suit  to  enjoin 
the  collection  thereof.  (Cummings  v.  National  Bank,  101  U.  S..  153; 
Hills  V.  Exchange  Bank,  105  U.  S.,  319;  Pelton  v.  Commercial  National 
Bank,  101  U.  S.,  143;  Boyer  v.  Boyer,  113  U.  S.,  143;  Third  National 
Bank  v.  Hughes,  76  Fed.  Rep.,  385.)  But  two  banks  against  the  stock 
of  which  separate  assessments  have  been  made  can  not  join  in  such  a 
suit.  (Jones  v.  Rushville  National  Bank,  138  Ind.,  87.)  And  where 
there  is  a  statutory  tribunal  empowered  to  grant  full  relief  in  such 
cases,  an  injunction  will  not  be  issued  until  application  shall  have  first 
been  made  to  such  tribunal.  (Albuquerque  National  Bank  v.  Perea, 
147  U.  S.,  87;  First  National  Bank  v.  Bailey,  15  Mont.,  301.  See  Eaton 
V.  Union  County  National  Bank,  141  Ind.,  136;  Castles  v.  City  of  New 
Orleans,  46  La.  Ann.,  542;  First  National  Bank  v.  Brodhecker,  137  Ind., 
693.)  And  where  a  National  bank  seeks  an  injunction  to  restrain  the 
collection  of  a  tax  on  the  ground  of  excessive  valuation  of  its  shares, 
the  sum  admitted  to  be  due  must  be  first  paid  or  tendered.  (Al- 
buquerque National  Bank  v.  Perea,  147  U.  S.,  87.)  A  court  of  equity 
has  jurisdiction  to  restrain  the  sale  of  the  property  of  the  bank  for 
taxes  assessed  upon  the  stock  of  its  shareholders.  (Brown  v.  French, 
80  Fed.  Rep.,  166.)  And  an  action  for  this  purpose  may  be  maintained 
by  the  Receiver  of  an  insolvent  National  bank.    (Id.) 


148 

Pleading. — To  make  a  case  entitling  a  National  bank  to  relief,  it 
must  be  shown  that  there  is  a  discrimination  in  favor  of  some  con- 
siderble  amount  of  other  moneyed  capital.  (Washington  National 
Bank  v.  King's  County,  9  Wash.,  607.)  The  classes  of  unassessed 
moneyed  capital  must  be  stated  with  succinct  particularity  to  enable 
the  court  to  judge  whether  they  belong  to  the  class  contemplated  by 
the  statute.  (Id.)  An  allegation,  "  all  the  moneyed  capital  in  the 
State  owned  by  resident  individual  citizens,  and  invested  as  aforesaid 
in  interest-bearing  loans,  discounts  and  securities,  except  that  owned 
by  and  invested  in  incorporated  banks  located  in  this  State "  is  too 
general  a  description  of  the  capital  in  favor  of  which  there  is  dis- 
crimination.    {Id.) 

§  148.  State  Taxation  of  National  Bank  Notes. — That  circu- 
lating notes  of  National  banking  associations  and  United  States 
legal-tender  notes  and  other  notes  and  certificates  of  the 
United  States,  payable  on  demand  and  circulating  or  intended  to 
circulate  as  currency,  and  gold,  silver,  or  other  coin  shall  be  subject 
to  taxation  as  money  on  hand  or  on  deposit  under  the  laws  of  any 
State  or  Territory :  Provided,  That  any  such  taxation  shall  be  exer- 
cised in  the  same  manner  and  at  the  sajne  rate  that  any  such  State 
or  Territory  shall  tax  money  or  currency  circulating  as  money 
within  its  jurisdiction. 

That  the  provisions  of  this  act  shall  not  be  deemed  or  held  to 
change  existing  laws  in  respect  of  the  taxation  of  National  banking 
associations.  (Act  August  13,  1894,  Ch.  281,  Sees.  1  and  2,  28 
Stat.  U.  S.,  278.) 

This  does  not  apply  to  the  bank  issuing  the  notes,  but  to  the  holders 
thereof. 

§  149.  United  States  Bonds  Exempt  from  Taxation. — All  stocks, 
bonds.  Treasury  notes,  and  other  obligations  of  the  United  States 
shall  be  exempt  from  taxation  by  or  under  State  or  municipal  or 
local  authority.    (Eev.  Stat.  U.  S.  Sec.  3701.) 

So  far  as  this  section  prohibits  State  taxation  of  legal-tender  notes  it 
was  repealed  by  Act  August  13,  1894.     (See  preceding  section.) 

§  150.  Taxation  of  Banks  in  District  of  Columbia. — Each  Na- 
tional bank  located  in  the  District  of  Columbia,  as  trustee  for  its 
stockholders,  is  required,  through  its  president  or  cashier,  to  make 


149 

aflfidavit  to  the  board  of  personal  tax  appraisers  on  or  before  the 
first  day  of  August  in  each  year  as  to  the  amount  of  its  gross  earn- 
ings for  the  year  ended  the  30th  of  June  preceding,  and  to  pay  a 
tax  thereon  at  the  rate  of  six  per  cent,  per  annum.  The  real 
estate  owned  by  such  bank  is  taxed  as  other  real  estate  in  the  Dis- 
trict.    (Act  July  1,  1902;  32  U.  S.  Stat,  619.) 


CHAPTEK   VI. 
Dissolution  and  Keceivership. 

Section  151.  Voluntary  Liquidation. 

152.  Notice  of  Intention  to  Go  into  Liquidation. 

153.  Mode  of  Enforcing  Stockholders'  Liability. 

154.  Appointment  of  Keceiver  for  Failure  of  Bank  to  Pay 

its  N'otes. 

155.  Appointment  of  Eeceiver  Where  Franchises  Forfeited 

— In  Cases  of  Insolvency. 

156.  Duties  and  Powers  of  Eeceiver. 

157.  Advertisement  of  Comptroller  to  Creditors. 

158.  Dividends  to  Creditors. 

159.  Injunction  Upon  Eeceivership. 

160.  Expenses  of  Protest,  Examination  and  Eeceivership. 

161.  Equities  in  Eeal  Estate,  etc. — Protection  of — Eecom- 

mendation  of  Eeceiver. 

162.  Same  Subject — Approval  of  Comptroller  and  Secre- 

tary of  Treasury. 

163.  Same  Subject — Mode  of  Paying  for  Property. 

164.  Disposition  of  Assets  After  Payment  of  Creditors — 

Agent  for  Stockholders — Mode  of  Distribution. 

165.  Violation  of  National  Bank  Act — How  Determined 

— Penalty  For — Liability  of  Directors. 

166.  Transfers  in  Contemplation  of  Insolvency — Prefer- 

ences. 

§  151.  Voluntary  Liquidation. — ^^Any  association  may  go  into 
liquidation  and  be  closed  by  the  vote  of  its  shareholders  owning 
two-thirds  of  its  stock.     (Eev.  Stat.  U.  S.  Sec.  5220.) 

Shabeholdeks*  Power  Undeb  this  Section. — Shareholders  owning 
two-thirds  of  the  stock  have  it  in  their  power  to  place  the  bank  in 
liquidation  at  any  time,  and  so  it  would  appear  that  the  Comptroller's 
consent  is  not  necessary;  but  as  such  vote  does  not  debar  the  Comp- 
troller from  passing  upon  the  bank's  solvency  and  appointing  a  Re- 
ceiver if  insolvent,  he  should  be  promptly  informed  of  the  intention 
to  go  into  voluntary  liquidation. 

150 


161 

Shareholders'  Meeting. — Th«  action  must  be  taken  at  a  meeting  of 
stockholders  duly  assembled.  (See  note  to  Section  28.)  The  notice 
of  meeting  should  clearly  indicate  the  business  to  be  transacted.  The 
vote  in  favor  of  the  liquidation  must  represent  two-thirds  of  all  the 
stock.  But  shareholders  owning  two-thirds  of  the  stock  may  place  the 
bank  in  liquidation,  though  this  may  be  contrary  to  the  wishes,  and 
against  the  interests,  of  the  owners  of  the  minority  of  the  stock.  (Wat- 
kins  V.  National  Bank  of  Lawrence,  51  Kans.,  254.) 

A  person  who,  with  full  knowledge  of  all  the  steps  taken  in  placing 
a  bank  in  liquidation,  receives  and  retains  a  dividend  paid  by  the 
officers  in  control  of  the  liquidating  bank,  will  not  be  heard  to  deny 
the  validity  of  the  liquidation.  (Id.  See  also  First  National  Bank  of 
Centralia  v.  Marshall,  26  111.  App.,  440.) 

New  Contracts. — After  a  National  bank  has  been  placed  in  liquida- 
tion, its  officers  have  no  authority  to  transact  any  business  in  its  name, 
except  such  as  is  implied  in  the  duty  of  winding  up  its  affairs.  (Rich- 
mond V.  Irons,  121  U.  S.,  27;  Schroder  v.  Manufacturers'  National  Bank 
of  Chicago,  133  U.  S.,  67;  Elwood  v.  First  National  Bank,  41  Kans., 
475;  Moss  v.  Whitzel,  108  Fed.  Rep.,  579=.)  Creditors  who,  after  the 
bank  has  suspended  payment  and  gone  into  liquidation,  receive  in  set- 
tlement of  their  claims  bills  receivable,  indorsed  or  guaranteed  in  the 
name  of  the  bank  by  its  President,  can  not  claim  as  creditors  against 
the  shareholders,  as  the  original  debt  is  paid.  (Elwood  v.  First  Na- 
tional Bank,  supra.) 

Right  of  Stockholders  to  Inspect  Books. — The  stockholders  of  a 
National  bank  in  process  of  liquidation  may  in  a  proper  case  by  writ 
of  mandamus  require  the  officers  and  directors  to  exhibit  to  them  the 
books,  papers  and  assets  of  the  bank,  and  permit  them  to  examine  the 
same.    (Matter  of  Tuttle  v.  Iron  National  Bank,  170  N.  Y.,  9.) 

Corporate  Existence. — The  placing  of  the  bank  in  liquidation  does 
not  dissolve  it  as  a  corporation;  but  it  will  continue  to  exist  as  a  body 
corporate  for  the  purpose  of  suing  and  being  sued  until  its  affairs  are 
finally  closed.  (National  Bank  v.  Insurance  Company,  104  U.  S.,  54; 
Ordway  v.  Central  National  Bank,  47  Md.,  217.  But  see  Hodgson  v. 
McKinstry,  3  Kans.  App.,  412.) 

Receiver. — Where  the  bank  is  insolvent  the  Comptroller  of  the  Cur- 
rency may  appoint  a  receiver  therefor,  notwithstanding  the  stock- 
holders have  voted  to  place  the  bank  in  liquidation.  (Washington 
National  Bank  of  Tacoma  v.  Eckels,  57  Fed  Rep.,  870.)  And  a  court 
of  competent  jurisdiction  may  appoint  a  receiver  for  a  liquidating 
bank,  where  the  bank  is  insolvent,  or  its  affairs  are  being  mismanaged. 
(Irons  V.  Manufacturers'  National  Bank,  6  Biss.,  301;  Elwood  v.  First 
12 


152 

National  Bank,  41  Kans.,  475).  But  the  appointment  of  a  receiver  by 
a  court  rests  largely  within  the  discretion  of  the  court,  and  before  it 
will  take  the  property  and  business  of  a  liquidating  bank  from  the 
control  of  the  directors  into  its  own  hands,  it  must  appear  that  the 
danger  of  loss  or  injury  to  the  rights  of  the  plaintiff  is  clearly  proved, 
and  the  necessity  and  right  for  the  appointment  of  a  receiver  free 
from  reasonable  doubt.  (Watkins  v.  National  Bank  of  Lawrence,  51 
Kans.,  254.) 

Liquidating  Bank  as  Gabnishee. — The  right  of  a  creditor  of  a  de- 
positor to  make  the  bank  a  garnishee  is  not  affected  by  the  fact  that  the 
bank  has  gone  into  voluntary  liquidation.  (Birmingham  National  Bank 
V.  Mayer,  104  Ala.,  634.) 

Dividends. — Liquidation  dividends  of  a  National  bank  belong  to  the 
holder  of  shares,  whether  those  shares  be  recorded  upon  the  books  of 
the  bank  or  not,  and  must  be  paid  to  the  holder  of  such  shares  on  de- 
mand. The  negotiability  or  transferable  character  of  the  stock  of  a 
National  bank  depends  upon  the  laws  of  the  United  States,  and  is  not 
affected  by  State  laws.  (Bath  Savings  Institution  v.  Sagadahoc  Na- 
tional Bank,  89  Maine,  500.) 

Liquidation  fob  Pubpose  of  Consolidation. — The  best  plan,  if  two 
banks  desire  to  consolidate,  is  to  increase  (see  Section  5142)  the  capital 
of  No.  1  to  the  extent  necessary  to  equal  the  stock  of  both;  put  No.  2 
in  liquidation  in  the  regular  way,  and  sell  out  its  assets  to  No.  1,  pay- 
ing for  them  in  the  increased  stock  to  be  distributed  among  stock- 
holders of  No.  2.  The  circulation  of  No.  2  being  provided  for  by  a 
deposit  of  lawful  money,  its  bonds  can  be  transferred  to  account  of 
No.  1.  which  last  will  receive  circulation  thereon.  The  whole  transac- 
tion in  regard  to  circulation  need  not  occupy  over  ten  days.  The  law- 
ful money  can  doubtless  be  borrowed  for  the  necessary  time. 

For  full  information  as  to  placing  a  bank  in  liquidation  see  page 
246. 

§  152.  Notice  of  Intention  to  (Jo  into  liquidation. — Whenever 
a  vote  is  taken  to  go  into  liquidation  it  shall  be  the  duty  of  the 
board  of  directors  to  cause  notice  of  this  fact  to  be  certified,  under 
the  seal  of  the  association,  by  its  president  or  cashier,  to  the  Comp- 
troller of  the  Currency,  and  the  publication  thereof  to  be  made  for 
a  period  of  two  months  in  a  newspaper  published  in  the  city  of 
New  York,  and  also  in  a  newspaper  published  in  the  city  or  town 
in  which  the  association  is  located,  or  if  no  newspaper  is  there 
published,  then  in  the  newspaper  published  nearest  thereto,  that 


153 

the  association  is  closing  up  its  affairs,  and  notifying  the  holders 
of  its  notes  and  other  creditors  to  present  the  notes  and  other 
claims  against  the  association  for  payment.  (Eev.  Stat.  U.  S.  Sec. 
5221.) 

Date  of  Liquidation.— The  liquidation  takes  effect  on  the  date  of 
the  vote  and  not  on  the  receipt  of  the  notice  by  the  Comptroller,  or  it 
may  talce  effect  on  some  future  date  if  so  voted  and  reported  to  the 
Comptroller.  Thus  two-thirds  may  vote  to  liquidate;  the  vote  may  be 
taken  on  the  third  of  the  month;  the  notice  may  be  sent  on  the  sixth, 
and  be  received  by  the  Comptroller  on  the  ninth.  The  books  of  the 
Comptroller's  office  will  place  the  association  in  liquidation  on  the 
third,  but  if  the  vote  be  taken  on  the  third  to  commence  to  liquidate 
the  association  on  the  twentieth,  then  the  Comptroller  will  note  the 
liquidation  as  of  that  date. 

Notice,  Etc.— Blanks  for  certifying  the  notice  to  the  Comptroller  of 
the  Currency  are  furnished  by  that  office,  and  can  be  obtained  on  ap- 
plication there;  also  form  to  be  used  in  making  the  publication  required 
by  the  section.     (See  forms,  page  247.) 

Insertion  of  notice  in  a  weekly  paper  or  in  the  weekly  issue  of  a  daily 
In  New  York  and  at  home,  is  regarded  as  fulfilling  the  requirements  of 
the  law.  The  notice  should  appear  in  each  weekly  issue  of  the  paper 
within  the  two  months  from  the  date  of  the  first  issue  in  which  the 
notice  appears. 

Pbocess  of  Liquidation." — Associations  in  voluntary  liquidation  re- 
tain their  corporate  existence,  and  can  sue  or  be  sued  until  their  affairs 
are  finally  liquidated.  The  process  of  liquidation  may  be  conducted  by 
the  directors  and  officers  of  the  bank,  or  the  directors  may  appoint  a 
committee  from  their  own  number  for  the  purpose.  In  any  event  it  is 
better  to  keep  up  the  board  of  directors  by  regular  annual  elections 
until  the  liquidation  is  complete.  The  usual  course  is  to  pay  depositors 
In  full,  and  then,  as  funds  are  realized  from  assets,  pay  pro  rata  divi- 
dends to  stockholders.  Usually  there  is  a  residue  of  deposits  which  are 
not  called  for.  Before  dividends  are  paid  to  stockholders  funds  to  meet 
this  residue  if  called  for  should  be  set  aside. 

§  153.  Mode  of  Enforcing  Stockholders'  Liability. — That  when 
any  National  banking  association  shall  have  gone  into  liquidation 
under  the  provisions  of  section  five  thousand  two  hundred  and 
twenty  of  said  Statutes,  the  individual  liability  of  the  shareholders 
provided  for  by  section  fifty-one  hundred  and  fifty-one  of  said 
Statutes  may  be  enforced  by  any  creditor  of  such  association,  by 


154 

bill  in  equity  in  the  nature  of  a  creditor's  bill,  brought  by  such 
creditor  on  behalf  of  himself  and  of  all  other  creditors  of  the  as- 
sociation, against  the  shareholders  thereof,  in  any  court  of  the 
United  States  having  original  jurisdiction  in  equity  for  the  dis- 
trict in  which  such  association  may  have  been  located  or  established. 
(Act  June  30, 1876,  Ch.  156,  Sec.  2;  19  Stat.  U.  S.  63.) 

The  only  authorized  procedure  for  enforcing  the  individual  liability 
of  the  shareholders  of  a  National  bank  which  has  gone  into  voluntary 
liquidation  is  by  a  bill  in  equity  in  the  nature  of  a  creditor's  bill, 
brought  by  a  creditor  "  on  behalf  of  himself  and  of  all  other  creditors 
of  the  association."  (Williamson  v.  American  Bank,  109  Fed.,  36; 
115  Fed.  Rep.,  793.) 

§  154.  Appointment  of  Eeceiver  for  railnre  of  Bank  to  Pay  its 
Notes. — On  becoming  satisfied,  as  specified  in  sections  fifty-two 
hundred  and  twenty-six  and  fifty-two  hundred  and  twenty-seven, 
that  any  association  has  refused  to  pay  its  circulating  notes  as 
therein  mentioned,  and  is  in  default,  the  Comptroller  of  the  Cur- 
rency may  forthwith  appoint  a  receiver,  and  require  of  him  such 
bond  and  security  as  he  deems  proper.  (Kev.  Stat.  TJ.  S.  Sec. 
5234.) 

§  155.  Appointment  of  Keceiver  Where  Franchises  Forfeited— 
in  Cases  of  Insolvency. — That  whenever  any  National  banking  asso- 
ciation shall  be  dissolved,  and  its  rights,  privileges,  and  franchises 
declared  forfeited,  as  prescribed  in  section  fifty-two  hundred  and 
thirty-nine  of  the  Revised  Statutes  of  the  United  States,  or  when- 
ever any  creditor  of  any  National  banking  association  shall  have  ob- 
tained a  judgment  against  it  in  any  court  of  record,  and  made  ap- 
plication, accompanied  by  a  certificate  from  the  clerk  of  the  court 
stating  that  such  judgment  has  been  rendered  and  has  remained  un- 
paid for  the  space  of  thirty  days,  or  whenever  the  Comptroller  shall 
become  satisfied  of  the  insolvency  of  the  National  banking  as- 
sociation, he  may,  after  due  examination  of  its  affairs,  in  either 
case,  appoint  a  receiver,  who  shall  proceed  to  close  up  such  as- 
sociation, and  enforce  the  personal  liability  of  the  shareholders,  as 
provided  in  section  fifty-two  hundred  and  thirty-four  of  said 
statutes.    (Act.  Jime  30, 1876,  Ch.  156,  Sec.  1;  19  Stat.  U.  S.  63.) 


155 

This  section  is  not  unconstitutional.  (Bushnell  v.  Leland.  164  U.  S., 
684.) 

Decision  of  Comptbolleb. — Formerly,  when  a  bank  became  insolvent, 
It  was  necessary,  before  the  Comptroller  could  appoint  a  receiver,  that 
one  of  the  notes  of  the  bank  should  be  presented  and  protested  for  non- 
payment; but  by  the  act  of  June  30,  1876,  it  was  provided  that  a  re- 
ceiver might  be  appointed  whenever  the  Comptroller  shall  become  satis- 
fled  of  the  insolvency  of  the  bank. 

And  it  has  been  held  under  this  act  that  the  decision  of  the  Comj)- 
troller  that  the  bank  is  insolvent  is  final,  and  is  not  reviewable  by  the 
courts  (Washington  National  Bank  v.  Eckels,  57  Fed.  Rep.,  870.)  Nor 
Is  the  Comptroller's  power  in  this  respect  limited  by  the  authority  given 
to  the  stockholders  under  Rev.  Stat.  U.  S.,  Sec.  5220,  to  place  the  bank 
In  liquidation  (Id.);  nor  by  the  act  of  1876,  authorizing  the  appointment 
of  an  "  agent "  for  the  stockholders.     (Id.) 

Evidence. — In  making  the  appointment  the  Comptroller  is  not  re- 
quired to  have  strictly  legal  evidence  of  the  facts  upon  which  he  bases 
his  action;  but  he  is  left  to  be  satisfied  as  best  he  can  be,  under  the 
peculiar  circumstances  of  each  case,  of  the  facts  and  the  necessity  for 
his  action.    (Piatt  v.  Beebe,  57  N.  Y.,  339.) 

Removal  of  Receiveb. — The  receiver  appointed  by  the  Comptroller 
may  be  removed  by  him  at  any  time.  (Kennedy  v.  Gibson,  18  Wallace, 
505.) 

JuBiSDiCTioN  OF  CouBTs  TO  APPOINT  Receiveb. — It  has  been  held  in 
several  cases  that  the  power  of  the  Comptroller  to  appoint  a  receiver  is 
not  exclusive,  and  that  a  court  of  equity  of  competent  jurisdiction  may 
direct  a  receivership  where,  according  to  the  rules  of  equity,  it  may  do 
BO  in  the  case  of  other  corporations.  (Irons  v.  Manufacturers'  National 
Bank,  6  Bissell,  301;  Wright  v.  Merchants'  National  Bank,  1  Flippin, 
561;  King  v.  Pomeroy,  121  Fed.  Rep.,  287;  58  C.  C.  A.,  209.)  A  re- 
ceiver so  appointed  may  enforce  the  individual  liability  of  the  stock- 
holders for  the  debts  of  the  bank.  (King  v.  Pomeroy,  121  Fed.  Rep., 
287;  58  C.  C.  A.,  209.)  That  a  receiver  may  be  appointed  in  a  proper 
case  by  a  Federal  court  for  a  bank  which  has  gone  into  voluntary 
liquidation,  there  is  no  question.  (Irons  v.  Manufacturers'  National 
Bank,  supra;  Richmond  v.  Irons,  121  U.  S.,  27.)  The  expenses  of  such 
a  receiver  can  not,  however,  be  charged  to  the  stockholders  as  a  part  of 
their  statutory  liability.     (Richmond  v.  Irons,  supra.) 

Peoof  OF  Insolvency. — The  return  of  an  execution  unsatisfied  is 
proof  of  the  insolvency  of  the  bank.    (Wheelock  v.  Kost,  77  111.,  296.) 


156 

Effect  of  Appointment  of  Receivee. — ^The  failure  of  a  bank  and  the 
seizure  by  the  Comptroller  of  the  Currency  ends  the  exercise  of  volition 
by  the  officers  of  the  bank,  suspends  the  payment  of  checks,  matures  all 
demand  notes  held  by  the  bank,  and  applies  to  the  payment  of  such 
notes,  all  balance  on  the  books  of  the  bank,  standing  to  the  credit  of 
the  makers  of  the  notes.  (Park  National  Bank  of  Chicago  v.  Niblack, 
67  111.  App.,  583.)  But  the  appointment  of  a  receiver  for  a  National 
bank  by  the  Comptroller  of  the  Currency  does  not  operate  to  dissolve 
the  corporation.  (Chemical  National  Bank  v.  Hartford  Deposit  Com- 
pany, 161  U.  S.,  1;  Bank  of  Bethel  v.  jPahquioque  Bank,  14  Wall.,  383; 
Chemical  National  Bank  v.  Hartford  Deposit  Company,  156  111.,  522.) 
And  after  passing  into  the  hands  of  a  receiver,  a  National  bank  re- 
mains liable  through  the  remainder  of  the  term,  for  accrued  and  accru- 
ing rent  under  a  lease  of  premises  occupied  by  it,  although  the  receiver 
may  have  abandoned  and  surrendered  them.  (Chemical  National  Bank 
V.  Hartford  Deposit  Company,  161  U.  S.,  1.)  But  if  the  lessor  in  the 
exercise  of  a  power  conferred  by  the  lease  re-enters  and  re-lets  the 
premises,  the  liability  of  the  bank  thus  re-letting  is  limited  to  the  rent 
then  accrued  and  unpaid,  and  the  diminution,  if  any,  in  the  rent  for  the 
remainder  of  the  term,  after  the  re-letting.     (Id.) 

Presentment  of  Papeb. — Where  a  National  bank  has  been  placed  in 
the  hands  of  a  receiver  paper  payable  at  the  bank  should  be  presented 
at  the  office  of  the  Receiver.  (Hutchison  v.  Crutcher,  98  Tenn.,  421.) 
Presentment  at  the  office  of  the  receiver  is  not  excused  because  the  re- 
ceiver has  removed  his  office  and  the  assets  of  the  bank  to  another 
building  in  the  same  place.  (Id.)  Where  a  bank  examiner  is  in  charge 
the  paper  should  be  presented  to  him.  (Auten  v.  Manistee  National 
Bank,  67  Ark.,  243.) 

Bankbuptcy  Law  Does  Not  Apply. — Insolvent  National  banks  can  be 
wound  up  only  in  the  mode  provided  by  the  National-bank  act;  and  it 
was  held  that  the  bankrupt  act  had  no  application  to  them.  (In  re 
Manufacturers'  National  Bank,  5  Bissell,  499.) 

Questioning  Validity  of  Appointment. — The  legality  of  the  appoint- 
ment of  a  receiver  can  not  be  inquired  into  by  the  debtors  or  stockhold- 
ers of  the  bank  when  sued  by  him;  as  to  them,  the  action  of  the  Comp- 
troller in  making  the  appointment  is  conclusive  until  set  aside  on  the 
application  of  the  bank.  (Cadle  v.  Baker,  20  Wallace,  650;  Peters  v. 
Foster,  56  Hun.,  607;  Young  v.  Wempke,  46  Fed.  Rep.,  354.) 

SuPEBvrsoRY  PowEB  OF  CoMPTBOLLEE. — The  receivcr  is  the  instrument 
of  the  Comptroller,  and  is  subject  to  the  general  direction  of  that 
officer.  (Kennedy  v.  Gibson,  8  Wallace,  505.)  But  the  language  of  the 
statute  that  the  receiver  shall  act  under  the  direction  of  the  Comih 


157 

troller  means  no  more  than  that  the  receiver  shaJl  be  subject  to  the 
direction  of  the  Comptroller;  it  does  not  mean  that  he  shall  do  no  act 
without  special  instructions.  Thus,  he  may  bring  an  action  to  re- 
cover an  ordinary  debt  due  to  the  bank  without  having  received  special 
instructions  from  the  Comptroller  to  do  so.  (Bank  v.  Kennedy,  17 
Y/allace,  19.)  Specific  authority  given  to  a  receiver  to  bring  an 
action  against  a  stockholder  to  recover  an  assessment  is  not  withdrawn 
or  affected  by  a  subsequent  general  authority  to  compromise  or  sell  all 
the  claims  or  assets  of  the  bank.  (McLain  v.  Rankin,  119  Fed.  Rep., 
110.) 

§  156.  Duties  and  Powers  of  Keceiver. — Such  receiver,  under 
the  direction  of  the  Comptroller,  shall  take  possession  of  the  books, 
records,  and  assets  of  every  description  of  such  association,  collect 
all  debts,  dues  and  claims  belonging  to  it,  and,  upon  the  order 
of  a  court  of  record  of  competent  jurisdiction,  may  sell  or  com- 
pound all  bad  or  doubtful  debts,  and,  on  a  like  order,  may  sell  all 
the  real  and  personal  property  of  such  association,  on  such  terms 
as  the  court  shall  direct;  and  may,  if  necessary  to  pay  the  debts 
of  such  association,  enforce  the  individual  liability  of  the  stock- 
holders. Such  receiver  shall  pay  over  all  money  so  made  to  the 
Treasurer  of  the  United  States,  subject  to  the  order  of  the  Comp- 
troller, and  also  make  report  to  the  Comptroller  of  all  his  acts 
and  proceedings.     (Kev.  Stat.  U.  S.  Sec.  5234.) 

Contracts  of  Recei^ter. — ^The  receiver  can  not  charge  the  estate  of  the 
bank  by  any  executory  contract,  unless  authorized  so  to  do  by  the  pro- 
visions of  the  law  and  the  order  of  a  court  of  competent  jurisdiction 
obtained  ui)on  the  terms  of  the  law.  (Ellis  v.  Little,  27  Kans.,  701.) 
Persons  dealing  with  him  are  bound  to  take  notice  of  the  limitations 
on  his  authority;  and  where  he  acts  outside  of  his  functions,  and  be- 
yond his  authority,  the  estate  and  the  property  of  the  bank  are  not 
charged  thereby.  (Id.)  A  Receiver  has  authority,  upon  sufficient  con- 
sideration, to  extend  the  time  of  payment  of  a  debt  owing  the  bank, 
where  by  so  doing  he  can,  in  his  judgment,  strengthen  the  security  he 
holds  for  the  payment  of  the  debt.  (People's  State  Bank  of  Lakota  v. 
Francis,  8  N.  D.,  369.) 

Sales  by  Receitee. — Before  the  receiver  can  sell  any  of  the  property 
of  the  bank  he  must  first  have  an  order  from  a  court  of  competent 
jurisdiction.  (Ellis  v.  Little,  27  Kans.,  707.)  But  it  is  not  necessary 
that  he  should  obtain  from  the  Comptroller  of  the  Currency  formal 
authorization  to  make  the  application;  nor  is  it  essential  that  he  should 


158 

likewise  have  the  authority  of  the  Comptroller  to  sell.  (Richardson  v. 
Turner,  52  La.  Ann.,  1613.)  A  Receiver  may  apply  to  a  court  of  record 
of  competent  jurisdiction  for  an  order  to  sell  stocks  and  bonds  in  pledge 
in  his  hands.  (Richardson  v.  Turner,  52  La.  Ann.,  1613.)  But  as  the 
courts  are  not  vested  with  any  general  supervisory,  or  directing  power 
over  National  banks,  they  cannot  order  or  authorize  a  receiver  to  sell 
at  private  sale  securities  held  by  the  bank  as  pledgee,  which  do  not 
come  within  the  authority  given  by  this  section  to  order  the  sale  or 
compounding  of  bad  or  doubtful  debts,  or  the  sale  of  real  or  personal 
property  of  the  association.  (In  re  Earle,  92  Fed.  Rep.,  22.)  The 
provision  that  the  Receiver  "  may,  if  necessary  to  pay  the  debts  of 
such  association,  enforce  the  individual  liability  of  the  stockholders," 
does  not  impose  a  personal  trust  and  duty  which  will  prevent  him 
from  selling  and  transferring  the  claim  against  a  stockholder.  (Wal- 
dron  V.  Ailing,  73  App.  Div.  (N.  Y.),  86.)  And  where  the  order  directs 
him  to  sell,  he  can  not  exchange  or  trade  the  property  for  other  prop- 
erty. (Ellis  V.  Little,  27  Kans.,  707.)  A  sale  made  by  a  receiver 
under  order  of  a  court  is  to  all  intents  and  purposes  a  judicial 
sale.  {In  re  Third  National  Bank,  9  Biss.,  535;  4  Fed.  Rep.,  775); 
and  the  approval  thereof  by  the  court  has  the  force  and  effect  of 
a  judgment,  and  such  proceedings  are  not  subject  to  collateral  attack. 
(Schaberg's  Estate  v.  McDonald,  60*xs^eb.,  493.) 

Compounding  Debts. — Debts  due  to  a  National  bank  can  not  be  com- 
pounded upon  the  order  of  the  Comptroller  of  the  Currency;  but  for 
this  purpose  the  order  of  some  court  of  competent  jurisdiction  is  re- 
quired. (Case  V.  Small,  10  Fed.  Rep.,  722.)  Such  an  order  may  be 
made  by  a  United  States  District  Court.  (Petition  of  Piatt,  1  Benedict, 
534.)  But  the  court  can  authorize  a  composition  of  only  such  claims  as 
are  "  bad  or  doubtful."  (iPrice  v.  Yates,  2  Nat.  Bank  Cases,  204.)  It  is 
questionable  whether  the  court  has  power  to  authorize  the  compounding 
of  the  statutory  liability  of  a  stockholder  in  a  National  bank.  (In  re 
certain  stockholders  of  the  California  National  Bank  of  San  Diego,  53 
Fed.  Rep.,  38;  Butler  v.  Poole,  44  Fed.  Rep.,  586.)  But  even  if  it  has  the 
power,  the  court  will  refuse  to  compound  such  liability  where  it  appears 
that  some  of  the  stockholders  have  conveyed  away  their  property  for 
the  purpose  of  avoiding  their  liability,  though  it  appear  that  in  this 
way  more  money  would  be  realized  for  the  creditors.  (Id.)  And  it  has 
been  held  that  a  judgment  recovered  by  the  Receiver  of  an  insolvent 
National  bank  against  a  stockholder  on  an  assessment  made  by  the 
Comptroller,  although  uncollectible,  is  not  a  *'bad  or  doubtful  debt," 
which  a  court  may  authorize  the  receiver  to  compound,  under  Rev.  St., 
Section  5234.  (In  re  Earle,  96  Fed.  Rep.,  678.)  But  a  receiver  may 
enforce  a  compromise  agreement  entered  into  for  the  settlement  of  a 
stockholders'  liability.     (McClain  v.  Rankin,  119  Fed.  Rep.,  110.) 


159 

Suits  By  and  Against  Receiveb. — The  receiver  may  sue  either  in  his 
own  name  or  in  the  name  of  the  bank.  (National  Bank  v.  Kennedy,  17 
Wallace,  19.)  And  a  creditor  may  bring  suit  either  against  the  receiver 
or  the  bank.  (Bank  of  Bethel  v.  Pahquioque  Bank,  14  Wallace,  833.) 
Thus,  an  action  may  be  brought  against  a  National  bank,  after  the  ap- 
pointment of  a  receiver,  to  recover  for  rent  due  on  a  lease,  and  for 
breach  of  the  terms  thereof;  and  the  receiver  is  not  a  necessary  party 
to  such  action.  (Chemical  National  Bank  of  Chicago  v.  Hartford  De- 
posit Co.,  156  111.,  522.)  In  the  case  of  ordinary  debts  due  to  the  bank 
the  receiver  may  bring  a  suit  to  recover  them  without  special  directions 
from  the  Comptroller.  (Id.)  But  when  the  individual  liability  of  the 
stockholders  is  to  be  enforced,  the  receiver,  before  beginning  suit,  must 
have  the  direction  of  the  Comptroller.  The  determination  on  the  part 
of  those  charged  with  winding  up  the  affairs  of  the  bank  to  resort  to 
this  ultimate  remedy  requires  the  exercise  of  due  consideration;  and  a 
receiver  ought  not  take  it  upon  himself  to  decide  so  important  a  ques- 
tion without  reference  to  the  Comptroller  under  whose  direction  he 
acts;  and,  although  it  is  his  duty  to  collect  the  assets  of  the  institution, 
he  does  not  distribute  them,  and  can  not  ordinarily  know,  without  refer- 
ence to  the  Comptroller,  whether  a  prosecution  of  the  stockholders  will 
be  necessary  or  not.  (Kennedy  v.  Gibson,  8  Wallace,  505;  Bank  v. 
Kennedy,  17  Wallace,  19.)  But  a  letter  from  the  Comptroller,  directing 
the  receiver  to  institute  suit,  is  sufficient  evidence,  if  not  objected  to, 
that  the  Comptroller  has  decided  that  it  is  necessary  to  enforce  the 
individual  liability  of  the  stockholders.  (Bowden  v.  Johnson,  107 
U.  S.,  251.)  While  a  creditor  of  a  National  bank  has  a  right  to  resort 
to  the  courts  to  have  his  claim  adjudicated  when  it  has  been  refused 
by  the  Comptroller  of  the  Currency,  it  is  doubtful  whether  the  receiver 
of  the  bank,  in  a  suit  in  which  the  Comptroller  of  the  Currency  is  not 
a  party,  can  be  made  to  account  for  an  administration  for  which  the 
Comptroller  is  solely  responsible.  (Mervill  v.  National  Bank  of  Jack- 
sonville, 41  U.  S.  App.,  529.) 

JuBiSDiCTioN  OF  FEDERAL  CouET. — The  reccivcr  of  an  insolvent  Na- 
tional bank  may  bring  suit  in  a  Federal  court  to  collect  assets  of  the 
bank  regardless  of  the  citizenship  of  the  parties.  (Fisher  v.  Yader,  53 
Fed.  Rep.,  565;  Linn  County  National  Bank  v.  Crawford,  69  Fed.  Rep., 
532.)  So,  a  suit  by  the  receiver  to  enforce  the  individual  liability  of 
the  stockholders  in  a  case  arising  under  the  laws  of  the  United  States, 
and  where  the  amount  involved  exceeds  $2000,  is  within  the  jurisdiction 
of  the  United  States  Circuit  Court.  (Thompson  v.  German  Insurance 
Company,  76  Fed.  Rep.,  892.)  And  so  a  suit  against  the  receiver  to 
compel  him  to  pay  out  of  the  funds  in  his  hands,  as  receiver,  moneys 
claimed  by  the  complainant  is  a  suit  arising  under  the  laws  of  the 
United  States,  and  can  be  removed  into  the  Federal  court.  (Hot 
Springs  Independent  School  District  v.  First  National  Bank  of  Hot 


160 

Springs,  61  Fed.  Rep.,  417.)  And  the  question  whether  a  savings  bank 
which  was  a  depositor  with  a  National  bank  which  has  become  in- 
solvent shall  be  paid  in  full  pursuant  to  a  State  statute,  is  a  question 
arising  under  the  laws  of  the  United  States,  and  entitles  the  receiver 
of  a  bank  when  sued  for  such  deposit  to  remove  the  case  into  the 
United  States  Circuit  Court.  (Auburn  Savings  Bank  v.  Hayes,  61  Fed. 
Rep.,  911.)  The  receiver  is  an  officer  of  the  United  States  within  the 
meaning  of  Section  563,  Rev.  Stat.  U.  S.,  which  gives  the  District  Courts 
jurisdiction  of  "  all  suits  at  common  law  brought  by  the  United  States, 
or  any  officer  thereof  authorized  by  law  to  sue."  (Stephens  v.  Bemays, 
41  Fed.  Rep.,  401;  Stanton  v.  Wilkinson,  8  Benedict,  357;  Price  v. 
Abbott,  17  Fed.  Rep.,  506;  Piatt  v.  Beach,  2  Benedict,  303.)  Where  the 
receiver  takes  a  case  by  appeal  or  writ  of  error  to  the  Supreme  Court 
of  the  United  States,  he  is  not  required  to  give  a  bond  to  answer  in 
damages  and  costs.  (Pacific  National  Bank  v.  Mixter,  114  U.  S.,  462; 
Pepper  v.  Fidelity  and  Casualty  Co.,  125  Fed.  Rep.,  822.) 

State  Courts — State  Statutes. — In  New  York  it  is  said  that  he  will 
not  be  treated  by  the  courts  of  that  State  as  a  foreign  receiver,  and 
can  sue  therein  to  recover  an  assessment  levied  on  the  shareholder  of 
a  bank  located  in  another  State.  (Peters  v.  Foster,  56  Hun.,  607.)  And 
being  a  person  expressly  authorized  to  sue,  he  is  excepted  from  the  pro- 
visions of  the  code  that  the  action  must  be  brought  in  the  name  of  the 
real  party  in  interest.  {Id.)  An  action  by  a  receiver  against  the  stock- 
holders is  governed  by  the  State  statute  of  limitations.  (Butler  v. 
Poole,  44  Fed.  Rep.,  586.) 

District  Attorney — State  Statutes. — As  the  receiver  is  the  agent  of 
the  United  States,  suits  instituted  by  him  should,  under  Section  380, 
Revised  Statutes,  be  conducted  by  the  United  States  district  at- 
torney for  the  district,  but  this  provision  is  only  directory,  and  if  the 
receiver  employs  other  counsel  in  a  suit  against  a  debtor  of  the  bank, 
the  defendant  can  not  be  heard  to  make  the  objection  that  this  duty 
of  the  local  officer  of  the  Grovernment  has  been  devolved  upon  another. 
(Kennedy  v.  Gibson,  8  Wallace,  498.)  But  United  States  district  attor- 
neys are  not  entitled  to  any  compensation,  in  addition  to  their  salaries, 
for  conducting  suits  brought  by  receivers  of  National  banks.  (Gibson 
V.  Peters,  150  U.  S.,  342.)  The  receiver  may  at  any  time  dismiss  an 
attorney  employed  by  him,  regularly  or  otherwise,  to  prosecute  claims 
of  the  bank,  and  employ  another  in  his  place,  whom  the  court  will,  by 
order,  substitute  in  the  place  of  the  dismissed  attorney,  except  as  to 
such  cases  as  the  latter  may  have  commenced  and  finished.  {In  re 
Herman,  50  Fed.  Rep.,  517.)  Where  a  contract  has  been  entered  into 
between  the  receiver  and  the  attorney  that  the  latter  shall  receive  the 
attorney's  fees  provided  for  in  the  notes  he  was  employed  to  collect, 
the  court  will  not  direct  the  substitution  of  another  attorney  in  un- 


161 

finished  cases  until  the  receiver  deposits  the  amount  of  the  attorney's 
fees  reserved  in  the  notes  as  a  security  to  the  dismissed  attorney  for 
Buch  services  as  he  may  have  rendered.     {Id.) 

Receiveb  Occupies  Same  Position  as  the  Bank. — Where  a  Receiver 
is  placed  in  charge  of  the  assets  of  a  National  bank,  he  stands,  as  to 
such  assets,  in  the  place  of  the  bank,  and  is  chargeable  with  knowledge 
of  all  facts  known  to  the  bank  affecting  the  character  of  such  assets. 
(People's  State  Bank  of  Lakota  v.  Francis,  8  N.  D.,  369.) 

Suits  Against  Directors. — Suits  against  the  directors  for  neglect  or 
mismanagement  of  the  affairs  of  the  bank  should  usually  be  brought 
by  the  receiver,  but  if  the  receiver  refuses  to  act,  such  suit  may  be 
brought  by  any  shareholder  on  behalf  of  himself  and  the  other  share- 
holders. (Brinkerhoff  v.  Bostwick,  88  N.  Y.,  52.)  And  so,  the  suit  may 
be  brought  by  a  shareholder  on  behalf  of  himself  and  the  other  share- 
holders when  the  receiver  is  himself  a  director  and  one  of  the  persons 
charged  with  neglect  or  misconduct  ild,)  See  further  on  this  subject 
note  to  Section  165. 

Power  of  Bank  Examiner  in  Charge  of  Bank. — A  bank  examiner, 
who  takes  charge  of  the  assets  of  a  National  bank  under  the  directions 
of  the  Comptroller,  is  not  the  agent  for  the  bank  in  such  negotiations 
as  the  bank  may  be  permitted  to  enter  into  with  a  view  to  the  re- 
sumption of  the  business.  (Tecumseh  National  Bank  v.  Chamberlain 
Banking  House,  63  Neb.,  163.) 

Duty  of  Directors  to  Preserve  Assets. — ^The  duty  of  the  directors 
to  take  the  necessary  steps  to  preserve  the  assets  of  the  bank  does  not 
end  merely  because  a  bank  examiner  has  taken  possession  of  the  bank 
by  direction  of  the  Comptroller  of  the  Currency.  (Robinson  v.  Hall, 
63  Fed.  Rep.,  222.)  Their  duties  as  directors  in  this  regard  do  not 
cease  until  a  receiver  has  been  appointed.  (Id.)  Thus,  it  would  be 
their  duty  to  see  that  a  mortgage  given  to  the  bank  was  duly  recorded, 
notwithstanding  a  bank  examiner  was  in  charge.     (Id.) 

§  157.  Advertisement  of  Comptroller  to  Creditors. — The  Comp- 
troller shall,  upon  appointing  a  receiver,  cause  notice  to  he  given, 
by  advertisement  in  such  newspaper  as  he  may  direct  for  three 
consecutive  months,  calling  on  all  persons  who  may  have  claims 
against  such  association  to  present  the  same,  and  to  make  legal 
proof  thereof.     (Eev.  Stat.  TJ.  S.  Sec.  5235.) 


I 


162 

§  158.  Dividends  to  Creditors. — From  time  to  time,  after  full 
provision  has  been  first  made  for  refunding  to  the  United  States 
any  deficiency  in  redeeming  the  notes  of  such  association,  the  Comp- 
troller shall  make  a  ratable  dividend  of  the  money  so  paid  over  to 
him  by  such  receiver  on  all  such  claims  as  may  have  been  proved 
to  his  satisfaction  or  adjudicated  in  a  court  of  competent  juris- 
diction, and,  as  the  proceeds  of  the  assets  of  such  association  are 
paid  over  to  him,  shall  make  further  dividends  on  all  claims  pre- 
viously proved  or  adjudicated;  and  the  remainder  of  the  proceeds, 
if  any,  shall  be  paid  over  to  the  shareholders  of  such  association, 
or  their  legal  representatives,  in  proportion  to  the  stock  by  them 
respectively  held.     (Rev.  Stat.  U.  S.  Sec.  5236.) 

How  Claims  Established. — The  claims  of  creditors  may  be  proved 
before  the  Comptroller,  or  established  by  suit  against  the  bank.  But 
creditors  must  seek  their  remedy  through  the  Comptroller  in  the  mode 
prescribed  by  the  statute;  they  can  not  proceed  directly  in  their  own 
names  against  the  stockholders  or  debtors  of  the  bank.  (Kennedy  v. 
Gibson,  8  Wallace,  505;  Bank  of  Bethel  v.  Pahquioque  Bank,  14  Wallace, 
383.)  The  decision  of  the  receiver  rejecting  a  claim  is  not  final,  but  the 
creditor  still  has  the  right  to  sue  therefor.  (Bethel  v.  Pahquioque 
Bank,  10  Wallace,  383.)  But  a  judgment  only  determines  the  validity 
of  the  claim,  and  the  creditor  must  await  the  pro-rata  distribution  by 
the  Comptroller,  and  can  not  have  execution  on  his  judgment.  {Id.) 
A  judgment  against  the  receiver  directing  the  manner  in  which  the 
assets  of  the  bank  shall  be  distributed  should  be  certified  by  the  receiver 
to  the  Comptroller  of  the  Currency  and  be  paid  in  due  course  of  distri- 
bution.    (Mervill  v.  National  Bank  of  Jacksonville,  41  U.  S.  App.,  529.) 

Interest. — Claims  when  proved  to  the  satisfaction  of  the  Comptroller 
are  upon  the  same  footing  as  if  they  had  been  put  in  judgment,  and 
bear  interest  the  same  as  a  judgment.  (National  Bank  of  Common- 
wealth V.  Mechanics'  National  Bank.  94  U.  S.,  437.)  But  a  creditor  who 
has  obtained  a  judgment  against  the  bank  is  not  entitled  to  interest 
upon  the  face  of  the  judgment,  but  only  upon  the  amount  of  the  claim 
at  the  date  of  the  failure.  (White  v.  Knox,  111  U.  S.,  784.)  A  de- 
positor is  entitled  to  interest  from  the  time  the  bank  suspends  payment, 
and  it  is  not  necessary  that  he  should  have  made  any  demand  on  the 
bank.  (Chemical  National  Bank  v.  Bailey,  12  Blatchford,  480.)  In  es- 
timating the  dividends  to  be  paid  out  of  the  assets,  the  value  of  the 
claims  at  the  time  the  insolvency  is  declared  is  to  be  taken  as  the  basis 
of  distribution.  (White  v.  Knox,  111  U.  S.,  784.)  Interest  should  be 
allowed  during  the  period  of  administration.  (National  Bank  of  Com- 
monwealth V.  Mechanics'  National  Bank,  94  U.  S.,  437;  White  v.  Knox, 


163 

111  U.  S.,  784.)  The  refusal  of  a  creditor  to  accept  the  receiver's  ofter 
to  allow  part  of  a  claim  without  prejudice  to  a  suit  for  allowance  of  the 
remainder,  or  to  the  receiver's  right  to  still  further  reduce  the  claim 
if  the  court  should  hold  such  reduction  proper,  bars  the  creditor's  right 
to  interest  on  subsequent  dividends  on  the  part  offered  to  be  allowed, 
although  it  is  subsequently  adjudged  that  the  whole  of  his  claim 
should  have  been  allowed;  but  he  is  entitled  to  interest  on  the  divi- 
dends on  the  part  rejected.  (Chemical  National  Bank  v.  Armstrong, 
59  Fed.  Rep.,  372.) 

Claims  fob  Tokts. — Claims  which  arise  out  of  the  neglect  or  wrong- 
ful acts  of  the  bank  are  to  be  paid  out  of  the  assets  the  same  as  the 
debts,  technically  so  called.  (Turner  v.  First  National  Bank,  26  Iowa, 
562.) 

Secubed  Cbeditobs — CoLLATEBALs. — A  secured  creditor  of  an  insolvent 
National  bank  may  prove  and  receive  dividends  upon  the  face  of  his 
claim  as  it  stood  at  the  time  of  the  declaration  of  insolvency,  without 
crediting  either  his  collaterals,  or  his  collections  made  afterwards,  sub- 
ject always  to  the  proviso  that  dividends  must  cease  when  from  them 
and  the  collaterals  realized  the  claim  has  been  paid  in  full.  (Merrill  v. 
National  Bank  of  Jacksonville,  173  U.  S.,  131;  Chemical  National  Bank 
V.  Armstrong,  59  Fed.  Rep.,  372-;  Mervill  v.  National  Bank  of  Jackson- 
ville, 41  U.  S.  App.,  529.    See  also  People  v.  Remington,  121  N.  Y.,  328.) 

Claims  Due  the  United  States. — The  priority  of  the  United  States  is 
only  for  the  deficiency  in  redeeming  the  notes  of  the  bank.  (Cook 
County  National  Bank  v.  United  States,  107  U.  S.,  445.)  Section  3466, 
United  States  Revised  Statutes,  which  gives  the  United  States  a  priority 
for  all  claims  due  it  from  insolvent  debtors,  does  not  apply.  (Id.)  As 
against  the  proceeds  of  the  bonds  deposited  to  secure  the  notes  of  the 
bank,  the  United  States  can  set  ofC  no  claim  except  for  such  deficiency. 
(Id.)  And  upon  the  failure  of  a  National  bank,  its  five  per  cent,  re- 
demption fund  can  not  be  retained  by  the  Treasurer  to  pay  taxes  due  to 
the  United  States,  but  the  fund  passes  to  the  Comptroller  as  an  asset 
of  the  association.    (Jackson  v.  United  States,  20  Ct.  Cls.,  298.) 

Authobity  of  the  Comptbolleb. — Under  Sections  5234  and  5236  of  the 
Revised  Statutes,  the  assets  of  an  insolvent  National  bank  so  collected 
by  the  receiver  are  entirely  within  the  control  and  disposition  of  the 
Comptroller  of  the  Currency,  and  the  receiver  is  without  power  in  re- 
spect to  the  payment  of  dividends.  The  receiver  is  the  mere  instrument 
of  the  Comptroller,  and  is  subject  in  all  respects  to  his  instructions. 
(Mervill  v.  National  Bank  of  Jacksonville,  41  U.  S,  App.,  529.) 

Suns  ON  Rejected  Claims. — ^Notwithstanding  the  insolvency  of  a  Na- 
tional bank,  and  the  appointment  of  a  receiver  by  the  Comptroller  of 


164 

the  Currency,  the  corporation  continues  as  a  legal  entity,  and  an  action 
may  be  maintained  against  it  on  a  claim  rejected  by  the  receiver. 
(Denton  v.  Baker,  24  C.  C.  A.,  476;  79  Fed.  Rep.,  189.')  As  in  such  case 
there  is  an  adequate  remedy  at  law,  the  holder  of  the  claim  cannot 
maintain  a  suit  in  equity  for  an  injunction  to  restrain  the  receiver 
from  rejecting  it.     (Id.) 

Acceptance  of  Dividends — Estoppel. — The  acceptance  of  dividends 
upon  a  claim  against  an  insolvent  National  bank  as  allowed  by  the 
Comptroller  of  the  Currency  does  not  estop  the  depositor  from  after- 
wards maintaining  an  action  against  such  bank  upon  a  claim  not  cov- 
ered by  such  allowance  of  the  Comptroller.  (Chemical  National  Bank 
of  Chicago  v.  World's  Columbian  Exposition,  170  111.,  82.) 

§  159.  Injunction  upon  Receivership. — Whenever  an  association 
against  which  proceedings  have  been  instituted,  on  account  of  any 
alleged  refusal  to  redeem  its  circulating  notes  as  aforesaid,  denies 
having  failed  to  do  so,  it  may,  at  any  time  within  ten  days  after  it 
has  been  notified  of  the  appointment  of  an  agent,  as  provided  in 
section  fifty-two  hundred  and  twenty-seven,  apply  to  the  nearest 
circuit,  or  district,  or  territorial  court  of  the  United  States  to 
enjoin  further  proceedings  in  the  premises;  and  such  court,  after 
citing  the  Comptroller  of  the  Currency  to  show  cause  why  further 
proceedings  should  not  be  enjoined,  and  after  the  decision  of  the 
court  or  finding  of  a  jury  that  such  association  has  not  refused  to 
redeem  its  circulating  notes,  when  legally  presented  in  the  lawful 
money  of  the  United  States,  shall  make  an  order  enjoining  the 
Comptroller,  and  any  receiver  acting  under  his  direction,  from  all 
further  proceedings  on  account  of  such  alleged  refusal.  (Eev.  Stat. 
U.  S.  Sec.  5237.) 

This  section  gives  a  bank  opportunity  to  disprove  mistaken  charges, 
and  a  method  of  stopping  unwarranted  proceedings.  (See  Moss  r. 
Whitzel,  108  Fed.  Rep.,  579.) 

§  160.  Expenses  of  Protest,  Examination  and  Receivership. — 

All  fees  for  protesting  the  notes  issued  by  any  National  banking  as- 
sociation shall  be  paid  by  the  person  procuring  the  protest  to  be 
made,  and  such  association  shall  be  liable  therefor;  but  no  part  of 
the  bonds  deposited  by  such  association  shall  be  applied  to  the  pay- 
ment of  such  fees.  All  expenses  of  any  preliminary  or  other  ex- 
aminations into  the  condition  of  any  association  shall  be  paid  by 


165 

such  association.  All  expenses  of  any  receivership  shall  be  paid 
out  of  the  assets  of  such  association  before  distribution  of  the 
proceeds  thereof.     (Rev.  Stat.  U.  S.  Sec.  5238.) 

Expenses  of  receivership  are  a  first  lien  upon  all  assets  except  bonds 
to  secure  circulation. 

§  161.  Equities  in  Real  Estate,  etc. — ^Protection  of — Recom- 
mendation of  Receiver. — That  whenever  the  receiver  of  any  Na- 
tional bank  duly  appointed  by  the  Comptroller  of  the  Currency, 
and  who  shall  have  duly  qualified  and  entered  upon  the  discharge 
of  his  trust,  shall  find  it  in  his  opinion  necessary,  in  order  to  fully 
protect  and  benefit  his  said  trust,  to  the  extent  of  any  and  all 
equities  that  such  trust  may  have  in  any  property,  real  or  personal, 
by  reason  of  any  bond,  mortgage,  assignment,  or  other  proper  legal 
claim  attaching  thereto,  and  which  said  property  is  to  be  sold  under 
any  execution,  decree  of  foreclosure,  or  proper  order  of  any  court 
of  jurisdiction,  he  may  certify  the  facts  in  the  case,  together  with 
his  opinion  as  to  the  value  of  the  property  to  be  sold,  and  the  value 
of  the  equity  his  said  trust  may  have  in  the  same,  to  the  Comp- 
troller of  the  Currency,  together  with  a  request  for  the  right  and 
authority  to  use  and  employ  so  much  of  the  money  of  said  trust  as 
may  be  necessary  to  purchase  such  property  at  such  sale.  (Act 
March  29,  1886,  Ch.  28,  Sec.  1;  24  Stat.  U.  S.  8.) 

It  often  occurred  that  real  estate  of  the  bank  or  other  assets  might  be 
Incumbered  by  mortgages  or  claims.  This  act  was  passed  to  provide 
a  way  in  which  these  incumbrances  might  be  removed,  by  paying  them 
oft  with  money  derived  from  the  collection  of  other  assets. 

§  162.  Same  Subject — Approval  of  Comptroller  and  Secretary 
of  Treasury. — That  such  request,  if  approved  by  the  Comptroller 
of  the  Currency,  shall  be,  together  with  the  certificate  of  facts  in 
the  case,  and  his  recommendation  as  to  the  amount  of  money  which, 
in  his  judgment,  should  be  so  used  and  employed,  submitted  to  the 
Secretary  of  the  Treasury;  and  if  the  same  shall  likewise  be  ap- 
proved by  him,  the  request  shall  be  by  the  Comptroller  of  the  Cur- 
rency allowed,  and  notice  thereof,  with  copies  of  the  request,  cer- 
tificate of  facts,  and  indorsement  of  approvals,  shall  be  filed  with 
the  Treasurer  of  the  TJnited  States.  (Act  March  29,  1886,  Ch.  28, 
Sec.  2;  24  Stat.  U.  S.  8.) 


166 

§  163.  Same  Subject — ^Mode  of  Paying  for  Property. — That 
whenever  any  such  requests  shall  be  allowed  as  hereinbefore  pro- 
vided, the  said  Comptroller  of  the  Currency  shall  be,  and  is,  em- 
powered to  draw  upon  and -from  such  funds  of  any  such  trust  as 
may  be  deposited  with  the  Treasurer  of  the  United  States  for  the 
benefit  of  the  bank  in  interest  to  the  amount  as  may  be  recom- 
mended and  allowed  and  for  the  purpose  for  which  such  allowance 
was  made:  Provided,  however.  That  all  payments  to  be  made  for 
or  on  account  of  the  purchase  of  any  such  property  and  under 
any  such  allowance  shall  be  made  by  the  Comptroller  of  the  Cur- 
rency direct,  with  the  approval  of  the  Secretary  of  the  Treasury, 
for  such  purpose  only  and  in  such  manner  as  he  may  determine  and 
order.     (Act  March  27,  1886,  Ch.  28,  Sec.  3;  24  Stat.  U.  S.  8.) 

§  164.  Disposition  of  Assets  After  Payment  of  Creditors — Agent 
for  Stockholders — Mode  of  Distribution. — That  whenever  any  as- 
sociation shall  have  been  or  shall  be  placed  in  the  hands  of  a  re- 
ceiver, as  provided  in  section  fifty-two  hundred  and  thirty-four 
and  other  sections  of  the  Revised  Statutes  of  the  United  States, 
and  when,  as  provided  in  section  fifty-two  hundred  and  thirty-six 
thereof,  the  Comptroller  of  the  Currency  shall  have  paid  to  each 
and  every  creditor  of  such  association,  not  including  shareholders 
who  are  creditors  of  such  association,  whose  claim  or  claims  as 
such  creditor  shall  have  been  proved  or  allowed  as  therein  pre- 
scribed, the  full  amount  of  such  claims,  and  all  expenses  of  the 
receivership  and  the  redemption  of  the  circulating  notes  of  such 
association  shall  have  been  provided  for  by  depositing  lawful 
money  of  the  United  States  with  the  Treasurer  of  the  United 
States,  the  Comptroller  of  the  Currency  shall  call  a  meeting  of  the 
shareholders  of  such  association  by  giving  notice  thereof  for  thirty 
days  in  a  newspaper  published  in  the  town,  city,  or  county  where 
the  business  of  such  association  was  carried  on,  or  if  no  newspaper 
is  there  published,  in  the  newspaper  published  nearest  thereto.  At 
such  meeting  the  shareholders  shall  determine  whether  the  re- 
ceiver shall  be  continued  and  shall  wind  up  the  affairs  of  such  as- 
sociation, or  whether  an  agent  shall  be  elected  for  that  purpose, 
and  in  so  determining  the  said  shareholders  shall  vote  by  ballot,  in 
person  or  by  proxy,  each  share  of  stock  entitling  the  holder  to  one 
vote,  and  the  majority  of  the  stock  in  value  and  number  of  shares 


167 

shall  be  necessary  to  determine  whether  the  said  receiver  shall  be 
continued,  or  whether  an  agent  shall  be  elected.  In  case  such 
majority  shall  determine  that  the  said  receiver  shall  be  continued, 
the  said  receiver  shall  thereupon  proceed  with  the  execution  of 
his  trust,  and  shall  sell,  dispose  of,  or  otherwise  collect  the  assets 
of  the  said  association,  and  shall  possess  all  the  powers  and  au- 
thority, and  be  subject  to  all  the  duties  and  liabilities  originally 
conferred  or  imposed  upon  him  by  his  appointment  as  such  re- 
ceiver, so  far  as  the  same  remain  applicable.  In  case  the  said 
meeting  shall,  by  the  vote  of  a  majority  of  the  stock  in  value  and 
number  of  shares,  determine  that  an  agent  shall  be  elected,  the 
said  meeting  shall  thereupon  proceed  to  elect  an  agent,  voting  by 
ballot,  in  person  or  by  proxy,  each  share  of  stock  entitling  the 
holder  to  one  vote,  and  the  person  who  shall  receive  votes  repre- 
senting at  least  a  majority  of  stock  in  value  and  number  shall  be 
declared  the  agent  for  the  purposes  hereinafter  provided;  and 
whenever  any  of  the  shareholders  of  the  association  shall,  after  the 
election  of  such  agent,  have  executed  and  filed  a  bond  to  the  satis- 
faction of  the  Comptroller  of  the  Currency,  conditioned  for  the 
payment  and  discharge  in  full  of  each  and  every  claim  that  may 
thereafter  be  proved  and  allowed  by  and  before  a  competent  court, 
and  for  the  faithful  performance  of  all  and  singular  the  duties  of 
such  trust,  the  Comptroller  and  the  receiver  shall  thereupon  trans- 
fer and  deliver  to  such  agent  all  the  undivided  or  uncollected  or 
other  assets  of  such  association  then  remaining  in  the  hands  or 
subject  to  the  order  and  control  of  said  Comptroller  and  said  re- 
ceiver, or  either  of  them;  and  for  this  purpose  said  Comptroller 
and  said  receiver  are  hereby  severally  empowered  and  directed  to 
execute  any  deed,  assignment,  transfer,  or  other  instrument  in  writ- 
ing that  may  be  necessary  and  proper;  and  upon  the  execution  and 
delivery  of  such  instrument  to  the  said  agent  the  said  Comptroller 
and  the  said  receiver  shall  by  virtue  of  this  act  be  discharged  from 
any  and  all  liabilities  to  such  association  and  to  each  and  all  the 
creditors  and  shareholders  thereof.  Upon  receiving  such  deed, 
assignment,  transfer,  or  other  instrument  the  person  elected  such 
agent  shall  hold,  control,  and  dispose  of  the  assets  and  property  of 
such  association  which  he  may  receive  under  the  terms  hereof  for 
the  benefit  of  the  shareholders  of  such  association,  and  he  may  in 

his  own  name,  or  in  the  name  of  such  association,  sue  and  be  sued 
13 


168 

and  do  all  other  lawful  acts  and  things  necessary  to  finally  settle 
and  distribute  the  assets  and  property  in  his  hands,  and  may  sell, 
compromise,  or  compound  the  debts  due  to  such  association,  with 
the  consent  and  approval  of  the  circuit  or  district  court  of  the 
United  States  for  the  district  where  the  business  of  such  associa- 
tion was  carried  on,  and  shall  at  the  conclusion  of  his  trust  render 
to  such  district  or  circuit  court  a  full  account  of  all  his  proceedings, 
receipts,  and  expenditures  as  such  agent,  which  court  shall,  upon 
due  notice,  settle  and  adjust  such  accounts  and  discharge  said  agent 
and  the  sureties  upon  said  bond.  And  in  case  any  such  agent  so 
elected  shall  refuse  to  serve,  or  die,  resign,  or  be  removed,  any  share- 
holder may  call  a  meeting  of  the  shareholders  of  such  association 
in  the  town,  city,  or  village  where  the  business  of  the  said  asso- 
ciation was  carried  on,  by  giving  notice  thereof  for  thirty  days  in 
a  newspaper  published  in  said  town,  city,  or  village,  or  if  no  news- 
paper is  there  published,  in  the  newspaper  published  nearest 
thereto,  at  which  meeting  the  shareholders  shall  elect  an  agent, 
voting  by  ballot,  in  person  or  by  proxy,  each  share  of  stock  en- 
titling the  holder  to  one  vote,  and  when  such  agent  shall  have 
received  votes  representing  at  least  a  majority  of  the  stock  in  value 
and  number  of  shares,  and  shall  have  executed  a  bond  to  the  share- 
holders conditioned  for  the  faithful  performance  of  his  duties,  in 
the  penalty  fixed  by  the  shareholders  at  said  meeting,  with  two 
sureties,  to  be  approved  by  a  judge  of  a  court  of  record,  and  file 
Baid  bond  in  the  office  of  the  clerk  of  a  court  of  record  in  the 
county  where  the  business  of  said  association  was  carried  on,  he 
shall  have  aU  the  rights,  powers,  and  duties  of  the  agent  first 
elected  as  hereinbefore  provided.  At  any  meeting  held  as  here- 
inbefore provided  administrators  or  executors  of  deceased  share- 
holders may  act  and  sign  as  the  decedent  might  have  done  if 
living,  and  guardians  of  minors  and  trustees  of  other  persons  may 
so  act  and  sign  for  their  ward  or  wards  or  cestui  qui  trust.  The 
proceeds  of  the  assets  of  property  of  any  such  association  which 
may  be  undisturbed  at  the  time  of  such  meeting  or  may  be  subse- 
quently received  shall  be  distributed  as  follows: 

"  First.  To  pay  the  expenses  of  the  execution  of  the  trust  to  the 
date  of  such  payment. 

"Second.  To  repay  any  amount  or  amounts  which  have  been 
paid  in  by  any  shareholder  or  shareholders  of  such  association  upon 


169 

and  by  reason  of  any  and  all  assessments  made  upon  the  stock  of 
such  association  by  the  order  of  the  Comptroller  of  the  Currency 
in  accordance  with  the  provisions  of  the  Statutes  of  the  United 
States;  and, 

"  Third.  The  balance  ratably  among  such  stockholders,  in  pro- 
portion to  the  number  of  shares  held  and  owned  by  each.  Such 
distribution  shall  be  made  from  time  to  time  as  the  proceeds  shall 
be  received  and  as  shall  be  deemed  advisable  by  the  said  Comp- 
troller or  said  agenf  (Act  June  30,  1876,  Ch.  156,  Sec.  3,  as 
amended  by  Act  March  2,  1897,  Ch.  354;  29  Stat.  U.  S.  600.) 

§  165.  Violation  of  National  Bank  Act — How  Determined — 
Penalty  For — ^Liability  of  Directors. — If  the  directors  of  any  Na- 
tional banking  association  shall  knowingly  violate,  or  knowingly 
permit  any  of  the  officers,  agents,  or  servants  of  the  association  to 
violate  any  of  the  provisions  of  this  Title,  all  the  rights,  privileges, 
and  franchises  of  the  association  shall  be  thereby  forfeited.  Such 
violation  shall,  however,  be  determined  and  adjudged  by  a  proper 
circuit,  district,  or  territorial  court  of  the  United  States,  in  a 
suit  brought  for  that  purpose  by  the  Comptroller  of  the  Currency, 
in  his  own  name,  before  the  association  shall  be  declared  dissolved. 
And  in  cases  of  such  violation,  every  director  who  participated  in 
or  assented  to  the  same  shall  be  held  liable  in  his  personal  and 
individual  capacity  for  all"  damages  which  the  association,  its 
shareholders,  or  any  other  person,  shall  have  sustained  in  con- 
sequence of  such  violation.     (Kev.  Stat.  U.  S.  Sec.  5239.) 

When  Bank  Liable  to  Fobfeitube. — To  render  a  National  bank  liable 
to  a  forfeiture  of  its  franchises  for  violation  of  law,  the  acts  must  have 
been  committed  by  the  directors,  or  have  been  knowingly  permitted  by 
them.  (Trenholm,  Comptroller  of  the  Currency,  v.  Commercial  Na- 
tional Bank  of  Dubuque,  38  Fed.  Rep.,  323.)  Violations  of  law  by  the 
executive  officers  or  agents  of  the  bank,  without  the  knowledge  and 
consent  of  the  directors,  do  not  constitute  grounds  for  forfeiting  the 
franchises.  (Id.)  And  in  an  information  to  procure  the  forfeiture  of 
the  bank's  franchises,  it  is  not  sufficient  to  aver  that  the  association 
committed  the  act  complained  of,  for  this  averment  might  be  sustained 
by  showing  that  the  act  was  committed  by  some  executive  officer  or 
agent;  but  the  information  must  charge  that  the  act  was  done  by  the 
directors,  or  that  they  knowingly  permitted  it  to  be  done.  (Id.)  Such 
a  suit  is  within  Section  1047,  Rev.  Stat.  U.  S.,  and  must  be  brought 
within  five  years.    (Welles  v.  Graves,  41  Fed.  Rep.,  459.) 


170 

Actions  Against  Dibectors — How  Brought. — An  action  to  recover 
damages  from  the  directors  for  losses  resulting  from  a  violation  of 
law  may  be  brought,  though  the  Comptroller  of  the  Currency  has  not 
procured  a  forfeiture  of  the  charter.  (Stephens  v.  Overstolz,  43  Fed. 
Rep.,  465.  But  see  Welles  v.  Graves,  41  Fed.  Rep.,  459.)  Where  a  re- 
ceiver has  been  appointed  for  the  bank,  the  action  should  be  brought 
by  him;  for  the  personal  liability  of  the  oflacers  and  directors  is  an 
asset  of  the  bank  belonging  equally  to  all  creditors,  and  must  therefore 
be  enforced  by  the  receiver  for  their  benefit  in  proportion  to  the  amount 
of  their  claims;  and  the  action  can  not  be  brought  by  a  creditor. 
V--  (Boyd  V.  Schneider,  124  Fed.  Rep.,  239;  Bailey  v.  Mosher,  63  Fed.  Rep.. 
488;  Exchange  Bank  v.  Peters,  45  Fed.  Rep.,  13) ;  nor  by  the  individual 
stockholders.  (Howe  v.  Barney,  45  Fed.  Rep.,  668.)  But  where  the 
receiver  refuses  to  bring  an  action  against  negligent  directors  to  re- 
cover the  amount  which  the  shareholders  have  been  compelled  to  con- 
tribute to  pay  the  debts  of  the  association,  an  action  against  such  di- 
rectors may  be  brought  by  a  shareholder  on  behalf  of  himself  and  the 
other  shareholders.  (Nelson  v.  Burrows,  9  Abb.  N.  C,  280;  Zinn  v. 
Baxter,  65  Ohio  St.,  341.)  And  where  the  receiver  is  a  director,  and 
one  of  the  parties  charged  with  misconduct  and  against  whom  a 
remedy  is  sought,  the  action  may  be  brought  by  a  shareholder  on  be- 
half of  himself  and  the  other  shareholders.  (Brinkerhoff  v.  Bostwick, 
88  N.  Y.,  52.)  Such  an  action  may  be  brought  in  a  State  court.  (Id.) 
It  must  be  brought  by  such  shareholder  on  behalf  of  himself  and  all 
the  other  shareholders,  the  bank  must  be  made  a  party,  the  judg- 
ment must  be  in  its  favor,  and  the  proceeds  of  such  judgment 
will  inure  to  the  common  benefit  of  all  the  shareholders  aliko.  (Zinn  v. 
Baxter,  65  Ohio  St.,  341.)  But  in  order  that  a  stockholder  may  bring 
an  action  against  the  directors  for  losses  caused  by  their  negligence, 
he  must  have  been  a  stockholder  at  the  time  when  the  acts  com- 
plained of  were  committed,  and  must  also  be  such  stockholder  when 
the  action  is  brought.     (Hanna  v.  Lyon,  179  N.  Y.,  107.) 

It  has  also  been  held  that  the  depositors  in  a  National  bank  may 
maintain  an  action  against  the  directors  to  recover  for  losses  caused  by 
the  negligent  performance  of  their  duties  as  such  directors.  (Boyd  v. 
Schneider,  131  Fed.  Rep.,  223.)  And  where  a  number  of  depositors 
are  affected  by  the  same  acts  of  negligence,  they  may  join  in  one  suit 
against  such  directors.  (Boyd  v.  Schneider,  131  Fed.  Rep.,  223.)  An 
action  against  a  director  under  this  section  is  not  an  action  to  recover  a 
penalty,  and  is  therefore  not  within  Section  1047,  Rev.  Stat.  U.  S., 
limiting  suits  for  any  penalty  or  forfeiture  accruing  under  the  laws  of 
the  United  States  to  five  years.    (Welles  v.  Graves,  41  Fed.  Rep.,  459.) 

Statute  Remedial — Estate  Liable. — The  statute  is  remedial  and  not 
penal,  and  the  liability  of  the  director  does  not  expire  with  his  death, 
but  survives  against  his  estate.  (Stephens  v.  Overstolz,  43  Fed.  Rep., 
465.) 


171 

WHETHEB  AC5TI0N  IN  EQUITY  OR  AT  LaW — STATUTORY  REMEDY  NOT  EX- 
CLUSIVE.— ^As  to  whether  the  suit  against  the  directors  should  be  brought 
in  equity  or  at  law,  the  authorities  are  not  agreed.  (See  Stephens  v. 
Overstolz,  43  Fed.  Rep.,  771;  National  Exchange  Bank  of  Baltimore  v. 
Peters,  44  Fed.  Rep.,  13;  Welles  v.  Graves,  41  Fed.  Rep.,  459;  Hirsh  v. 
Jones,  56  Fed.  Rep.,  137.)  The  remedy  of  a  creditor's  suit  given  by  the 
statute  is  cumulative  and  not  exclusive.  (King  v.  Pomeroy,  121  Fed. 
Rep.,  287;  58  C.  C.  A.,  209.)  Thus,  it  does  not  preclude  a  common  law 
action  of  deceit  against  the  directors  for  false  and  fraudulent  represen- 
tations made  by  them.     (Prescott  v.  Haughey,  65  Fed.  Rep.,  653.) 

False  Reports — Liability  of  Directors  for. — Directors  of  a  National 
bank  who,  in  a  simulated  performance  of  the  duties  prescribed  by  the 
law  applicable  to  such  an  institution,  relative  to  the  preparation  and 
publication  of  advertisements,  statements  and  reports,  knowingly  make 
and  publish  false  statements  and  reports  of  the  financial  condition  of 
the  bank,  with  intent  to  deceive,  and  such  matters  are  believed  and 
acted  upon  by  parties,  to  their  damage,  are  liable  for  the  damages,  in  an 
action  for  the  deceit.     (Stuart  v.  Bank  of  Staplehurst,  57  Neb.,  569.) 

§  166.  Transfers  in  Contemplation  of  Insolvency — ^Preferences. 

— All  transfers  of  the  notes,  bonds,  bills  of  exchange,  or  other  evi- 
dence of  debt  owing  to  any  National  banking  association,  or  of 
deposits  to  its  credit,  all  assignments  of  mortgages,  sureties  on 
real  estate,  or  of  judgments  or  decrees  in  its  favor;  all  deposits 
of  money,  bullion,  or  other  valuable  thing  for  its  use,  or  for  the 
use  of  any  of  its  shareholders  or  creditors,  and  all  payments  of 
money  to  either,  made  after  the  commission  of  an  act  of  insolvency, 
or  in  contemplation  thereof,  made  with  a  view  to  prevent  the  ap- 
plication of  its  assets  in  the  manner  prescribed  by  this  chapter,  or 
with  a  view  to  the  preference  of  one  creditor  to  another,  except  in 
payment  of  its  circulating  notes,  shall  be  utterly  null  and  void. 
(Eev.  Stat.  U.  S.  Sec.  5242.) 

Meaning  or  *'  Insolvency." — The  term  "  insolvency  "  as  used  in  this 
section  has  the  same  meaning  as  it  has  in  the  National  bankrupt  law; 
that  is,  it  does  not  mean  an  absolute  inability  to  pay  at  some  future 
time,  upon  a  settlement  and  winding  up  of  the  bank's  affairs,  but  a 
present  inability  to  pay  in  the  ordinary  course  of  business.  (Case  v. 
Citizens*  Bank  of  Louisiana,  2  Woods,  23.)  The  mere  fact  that  a 
correspondent  of  a  National  bank  refuses  to  pay  a  check  drawn  on  it 
by  such  bank  at  a  time  when  the  account  of  the  latter  is  overdrawn, 
does  not  constitute  an  act  of  insolvency  on  the  part  of  the  drawing 
bank,  which  would  render  subsequent  transfers  of  property  or  payments 
made  by  it  void,  as  preferences. 


172 

What  Constitutes  a  Pbefeeence. — To  bring  a  transfer  of  assets 
within  the  operation  of  this  section,  it  is  not  necessary  that  the  person  to 
whom  they  are  transferred  should  know  of  the  insolvency,  but  it  is 
sufllcient  if  the  insolvency  is  in  the  contemplation  of  the  bank  only. 
{Id.;  National  Security  Bank  v.  Butler,  129  U.  S.,  223.)  But  it  should 
appear  that  the  money  was  paid  in  contemplation  of  insolvency,  for  the 
purpose  of  giving  a  preference,  and  with  a  view  to  preventing  the 
application  of  the  assets  to  the  claims  of  creditors  generally.  (Hays  v. 
Beardsley,  136  N.  Y.,  299.)  And  the  fact  that  the  bank  was  known  to  be 
insolvent  at  the  time  by  the  officer  making  payment  does  not  make 
the  payment  illegal,  where  the  person  receiving  payment  was  treated 
like  any  other  creditor,  and  the  object  was  not  to  give  a  preference 
over  others.  (Id.)  If  the  person  receiving  payment  was  entirely 
ignorant  of  the  insolvency  of  the  bank,  and  acted  in  good  faith,  the  fact 
that  he  was  at  the  time  a  director  does  not  make  the  payment  illegal. 
(Id.)  It  will  be  presumed  that  any  transfer  of  assets,  made  after  the 
closing  of  the  bank  has  been  determined  upon,  whereby  any  creditor 
obtains  a  preference  over  other  creditors,  was  made  with  the  intent  to 
prefer.  (National  Security  Bank  v.  Price,  22  Fed.  Rep.,  697.)  But  it  is 
not  a  preference  unless  given  to  an  existing  creditor  to  secure  a  pre- 
existing debt.  (Casey  v.  Soci6t6  de  Cr6dit  Mobilier,  2  Woods.  77.)  And 
if  the  transaction  be  free  from  fraud  in  fact,  and  is  intended  merely 
to  adequately  protect  a  loan  made  at  the  time,  the  creditor  can  retain 
property  transferred  to  secure  such  loan  until  the  debt  be  paid,  though 
the  bank  is  insolvent  and  the  person  making  the  loan  has  reason  at 
the  time  to  believe  that  to  be  the  fact.  (Armstrong  v.  CJhemical  Na- 
tional Bank,  41  Fed.  Rep.,  234.)  So,  where  the  officers  of  a  bank,  which 
was  in  danger  of  failing,  in  the  hope  of  avoiding  a  failure,  pledged  cer- 
tain assets  to  a  depositor  in  order  to  Induce  him  to  allow  his  deposit 
to  remain  with  the  bank,  it  was  held  that  this  was  not  a  preference. 
(Roberts  v.  Hill,  23  Fed.  Rep.,  31.  See  also  Bell  v.  Hanover  National 
Bank,  57  Fed.  Rep.,  821.)  So  where  certain  property  of  the  bank  had 
been  attached,  it  was  held  that  a  transfer  of  assets  to  secure  the 
sureties  on  a  bond  given  to  release  the  attachment  was  not  a  preference. 
(Price  V.  Coleman,  22  Fed.  Rep.,  694.)  And  where  a  bank  had  in  good 
faith  accepted  the  draft  of  a  National  bank  the  day  before  the  latter's 
Insolvency,  and  afterwards  paid  the  same,  it  was  held  that  such  bank 
might  apply  the  proceeds  of  collections  made  by  it  on  paper  in  its  pos- 
session belonging  to  the  insolvent  bank  to  the  payment  of  the  debt, 
since  its  lien  on  such  collections  ran  from  the  date  of  the  acceptance. 
(McDonald  v.  Chemical  Bank,  174  U.  S.,  610;  In  re  Armstrong,  41  Fed. 
Rep.,  381.)  Remittances  made  in  usual  course  of  business  to  a  corres- 
pondent before  an  act  of  insolvency  committed  are  not  preferences, 
though  the  bank  is  actually  insolvent  at  the  time,  and  is  closed  by  the 
Comptroller  of  the  Currency  before  the  remittances  are  received  by  the 
correspondent.    (Hayden  v.  Chemical  National  Bank,  80  Fed.  Rep.,  587.) 


173 

Notes  given  in  renewal  of  other  notes  held  by  a  National  bank,  the 
original  notes  not  being  returned  to  the  maker,  are  not  "  evidences  of 
debt "  or  "  assets  "  within  the  meaning  of  this  section.  (First  National 
Bank  of  Decatur  v.  Johnston,  97  Ala.,  655.) 

Deposits  Made  When  Bank  Insolvent — Recoveby  of. — Upon  the 
general  ground  that  one  who  has  been  induced  to  part  with  his  property 
by  the  fraud  of  another,  under  the  guise  of  a  contract,  may,  upon 
discovery  of  the  fraud,  rescind  the  contract  and  reclaim  the  property, 
it  has  been  held  that  a  depositor  in  a  National  bank  may  recover  funds 
deposited  after  the  bank  has  become  hopelessly  insolvent,  it  being  con- 
sidered a  gross  fraud  on  the  part  of  the  bank  to  receive  them  under 
such  circumstances,  and  that  it  is  not  a  preference  for  him  to  so  re- 
claim his  deposit,  because  in  such  case  he  does  not  claim  under  a 
transfer  from  the  bank,  but  under  his  original  title,  and  he  does  not 
seek  to  enforce  any  right  as  creditor  of  the  bank,  but  merely  to  reclaim 
his  own  property  obtained  by  fraud.  (Cragie  v.  Hadley,  99  N.  Y.,  131.) 
And  the  fact  that  the  money  deposited  was  not  marked,  and,  by  a 
mingling  with  the  other  funds  of  the  bank,  lost  its  identity,  does  not 
affect  the  right  of  the  depositor  to  recover  in  full,  if  it  can  be  traced 
into  the  vault  of  the  bank,  and  it  appears  that  a  sum  equivalent  thereto 
remained  continuously  on  hand  in  the  bank  until  removed  by  the  re- 
ceiver. (Massey  v.  Fisher,  62  Fed.  Rep.,  958.)  But  the  moneys  or  paper 
deposited  or  the  proceeds  thereof  must  be  traced  into  the  hands  of  the 
receiver.  (Multnomah  County  v.  Oregon  National  Bank,  61  Fed.  Rep., 
912;  Spokane  County  v.  Clark,  61  Fed.  Rep.,  538;  Lake  Erie,  Etc.,  R. 
R.  Co.  V.  Indianapolis  National  Bank,  65  Fed.  Rep.,  690.  Compare  San 
Diego  County  v.  California  National  Bank,  52  Fed.  Rep.,  59.)  Hence, 
where  a  bank  which/  had  received  a  note  for  collection  and  remittance, 
and  had  not  remitted,  failed  with  cash  on  hand  less  than  the  amount 
of  the  collection,  it  was  held  that  the  lien  for  trust  funds  converted 
was  limited  to  the  amount  on  hand,  and  did  not  extend  to  the  other 
assets  of  the  bank,  where  there  was  no  proof  that  they  were  obtained 
with  the  money  converted.  (Boone  County  National  Bank  v.  Latimer, 
67  Fed.  Rep.,  27.)  A  creditor  of  an  insolvent  National  bank,  whose 
demand  grows  out  of  a  fraudulent  transaction  perpetrated  by  the 
oflScers  of  the  bank  in  contemplation  of  the  immediate  wrecking  of 
their  corporation,  does  not  thereby  become  entitled  to  a  preference 
over  the  general  creditors  of  the  bank.  (Citizens*  National  Bank  v, 
Dowd,  35  Fed.  Rep.,  340.) 

Action  of  Replevin. — ^A  person  claiming  title  to  property  in  the  pos- 
session of  a  receiver  which  has  come  into  his  possession  with  the 
property  belonging  to  the  bank,  may  maintain  an  action  of  replevin 
therefor.  (Com  Exchange  Bank  v.  Blye,  101  N.  Y.,  303.)  Hence,  where 
money  was  deposited  with  the  receiving  teller  of  a  bank  a  few  minutes 


174 

before  the  bank  closed  its  'doors,  to  be  credited  to  his  account,  and  the 
teller  not  being  aware  of  the  impending  failure,  after  crediting  the 
amount  in  the  depositor's  pass  book,  put  the  money  and  deposit  ticket 
to  one  side,  and  before  the  entry  was  made  in  the  books  of  the  bank, 
it  closed  its  doors,  and  the  money  was  by  order  of  the  directors  placed 
apart,  and  in  that  condition  delivered  to  the  receiver,  it  was  held  that 
the  depositor  could  replevy  the  money  so  deposited.  (Faber  v. 
Stephens,  35  Fed.  Rep.,  17.) 

Set-off. — This  section  does  not  prohibit  the  allowance  of  any  valid 
set-off,  legal  or  equitable,  which  a  debtor  of  a  bank  may  have  against 
any  obligation  owing  by  him  to  it  at  the  time  of  its  insolvency.  (Arm- 
strong, Receiver,  v.  Warner,  49  Ohio  St.,  376;  Scott  v.  Armstrong,  146 
U.  S.,  499.)  A  depositor  may  therefore  set-off  the  amount  of  his  deposit 
against  his  liability  as  maker  or  endorser  of  a  note  held  by  the  receiver, 
though  such  note  had  not  matured  when  the  bank  was  closed,  and  the 
receiver  appointed.  (Scott  v.  Armstrong,  146  U.  S.,  499;  Yardley  v. 
Clothier,  49  Fed.  Rep.,  337;  51  Fed.  Rep.,  506;  Adams  v.  Spokane  Drug 
Co.,  57  Fed.  Rep.,  888;  Mercer  v.  Dyer,  15  Mont.,  317;  Hughitt  v.  Hayes, 
136  N.  Y.,  163.)  But  the  debtor  of  the  bank  will  not  be  permitted  to 
set-off  against  his  liability  a  claim  against  the  bank  assigned  to  him 
after  the  bank  had  closed  its  doors.  (Venango  National  Bank  v.  Taylor, 
56  Pa.  St.,  14).  though  the  assignment  was  made  before  the  appoint- 
ment of  a  receiver  (Davis  v.  Knipp,  92  Hun.,  297;  Beckham  v.  Shackel- 
ford, 8  Tex.  Civ.  App.,  660.)  The  court  will  not  be  astute  to  divide  the 
day  into  fractions  to  defeat  a  right  of  set-off  claimed  by  a  creditor  of  an 
insolvent  National  bank.  (Faber  v.  Hanover  National  Bank,  64  Fed. 
Rep.,  832.) 

Against  the  proceeds  of  the  bonds  dei)osited  to  secure  circulation  the 
United  States  can  set-off  no  claim,  except  for  money  advanced  to  re- 
deem notes.     (Cook  County  National  Bank  v.  United  States,  107  U.  S., 

The  indebtedness  of  the  stockholders  on  their  individual  liability, 
together  with  the  other  assets  of  the  insolvent  bank,  constitute  a  trust 
fund  for  the  benefit  of  its  creditors;  and  in  equity  such  indebtedness 
of  a  stockholder  who  is  insolvent  may  be  set-off  against  a  dividend  pay- 
able out  of  the  trust  fund,  on  a  balance  due  him  on  his  deposit  account 
with  the  bank  at  the  time  of  its  failure.     (King  v.  Armstrong,  50  Ohio 

An  assignment  by  the  stockholder  of  his  claim  against  the  bank, 
before  the  direction  of  the  Comptroller  to  enforce  his  liability,  but  after 
the  insolvency  of  the  bank,  does  not  affect  the  right  to  set-off  his  lia- 
bility against  the  dividend  due  on  his  claim,  nor  does  the  fact  that  the 
Comptroller,  at  the  time  of  the  assignment,  had  not  determined  the 
amount  necessary  to  be  collected  from  the  stockholders  for  the  payment 
of  the  creditors.  It  is  suflicient  that  such  direction  has  been  given,  and 
amount  so  determined  when  the  set-off  is  made.     (Id.) 


175 

State  Statute — Debt  Due  Savings  Bank. — ^A  State  statute  directing 
that  deposits  made  by  savings  banks  shall  be  first  paid  out  of  the  assets 
of  an  insolvent  bank  can  have  no  application  to  an  insolvent  National 
bank,  since  such  statute  is  in  conflict  with  the  provisions  of  the  Na- 
tional-bank Act.  (Davis  v.  The  Elmira  Savings  Bank,  161  U.  S.,  275, 
reversing  S.  C,  142  N.  Y.,  590.).  A  State  statute  forbidding  conveyances 
by  insolvent  debtors  for  the  purpose  of  giving  a  preference  applies  to 
such  conveyance  made  to  a  National  bank.  (Traders'  National  Bank  v. 
Chipman,  164  U.  S.,  347.)  Such  a  statute  is  not  in  conflict  with  any 
provisions  of  the  National  Bank  Act.    {Id.) 

Federal  Question. — The  question  whether  a  savings  bank  which  was 
a  depositor  with  a  National  bank  which  has  become  insolvent  shall  be 
paid  in  full  pursuant  to  State  statute  is  a  question  arising  under  the 
laws  of  the  United  States,  and  entitles  the  receiver  of  the  bank  when 
sued  for  such  deposit  to  remove  the  case  into  the  United  States  Cir- 
cuit Court.  (Auburn  Savings  Bank  v.  Hayes,  61  Fed.  Rep.,  911.)  While 
an  Illinois  National  bank  in  which  a  Michigan  National  bank  had  kept 
an  account  as  a  depositor,  as  to  the  payment  of  check  and  draft  holders 
might  act  under  the  Illinois  law  as  against  the  law  prevailing  in 
Federal  courts,  when  such  Michigan  bank  became  insolvent  and  went 
into  the  hands  of  a  Receiver  appointed  by  the  Comptroller,  the  Federal 
law  became  the  law  of  the  distribution  of  the  assets,  and  the  payment 
of  checks  by  the  Illinois  bank  under  the  Illinois  law  is  no  excuse  in  an 
action  by  the  Receiver  against  the  Illinois  bank  for  the  balance  in  its 
hands  at  the  time  of  the  appointment  of  the  Receiver.  (First  National 
Bank  v.  Selden,  120  Fed.  Rep.,  212. 


CHAPTER  VII, 

Crimes  and  Misdemeanors. 

Section  167.  Unlawfully  Countersigning  Notes. 

168.  Eeceiving  United  States  or  National  Bank  Notes  as 

Security. 

169.  Embezzlement,   Abstraction  and  Misapplication  of 

Bank  Funds — False  Entries. 

170.  Illegal  Certification  of  Check. 

171.  Obligations  of  the  United  States  Defined. 

172.  Forging  and  Counterfeiting  National  Bank  Notes. 

173.  Wrongful  Use  of  Plates,  False  Plates,  Notes,  etc. 

174.  Passing,  Selling,  etc..  Counterfeits. 

175.  Taking  Impressions  of  Plates,  etc. 

176.  Persons  Having  Impressions,  etc.,  in  their  Possession. 

177.  Buying,  Selling,  etc..  Counterfeits. 

178.  Issuing,  etc..  Notes  of  Closed  Banks. 

179.  Eeceipt  of  Public  Money  When  Not  Authorized  De- 

positary. 

§  167.  Unlawfully  Countersigning  Notes. — No  oflBcer  acting 
under  the  provisions  of  this  Title  shall  countersign  or  deliver  to 
any  association,  or  to  any  other  company  or  person,  any  circulating 
notes  contemplated  by  this  Title,  except  in  accordance  with  the  true 
intent  and  meaning  of  its  provisions.  Every  officer  who  violates 
this  section  shall  be  deemed  guilty  of  a  high  misdemeanor,  and 
shall  be  fined  not  more  than  double  the  amount  so  countersigned 
and  delivered,  and  imprisoned  not  less  than  one  year  and  not  more 
than  fifteen  years.     (Kev.  Stat.  U.  S.  Sec.  5187.) 

This  applies  to  officers  of  the  Grovernment.    No  cases  have  arisen  under 
it  since  the  National  banking  law  went  into  force. 

§  168.  Eeceiving  United  States  ot  ITational-Bank  Notes  as 
Security. — No  association  shall  hereafter  offer  or  receive  United 
States  notes  or  National-bank  notes  as  security  or  as  collateral 
security  for  any  loan  of  money,  or  for  a  consideration  agree  to 
withhold  the  same  from  use.  or  offer  or  receive  the  custody  or 

176 


177 

promise  of  custody  of  such  notes  as  security,  or  as  collateral  se- 
curity, or  consideration  for  any  loan  of  money.  Any  association 
offending  against  the  provisions  of  this  section  shall  be  deemed 
guilty  of  a  misdemeanor,  and  shall  be  fined  not  more  than  one 
thousand  dollars  and  a  further  sum  equal  to  one-third  of  the 
money  so  loaned.  The  officer  or  officers  of  any  association  whc 
shall  make  any  such  loans  shall  be  liable  for  a  further  sum  equal 
to  one-quarter  of  the  money  loaned;  and  any  fine  or  penalty  in- 
curred by  a  violation  of  this  section  shall  be  recoverable  for  the 
benefit  of  the  party  bringing  such  suit.  (Rev.  Stat.  U.  S.  Sec. 
5207.) 

The  provision  of  this  section  was  designed  to  prevent  the  locking  up 
of  money.  It  was  aimed  at  a  favorite  method  of  accomplishing  this  at 
one  time  put  in  practice  in  New  York  city,  and,  perhaps,  elsewhere. 

§  169.  Embezzlement,  Abstraction  and  Misapplication  of  Banks' 
Funds — False  Entries. — Every  president,  director,  cashier,  teller, 
clerk,  or  agent  of  any  association,  who  embezzles,  abstracts,  or 
wilfully  misapplies  any  of  the  moneys,  funds,  or  credits  of  the  asi- 
Bociation;  or  who,  without  authority  from  the  directors,  issues 
or  puts  in  circulation  any  of  the  notes  of  the  association;  or  who, 
without  such  authority,  issues  or  puts  forth  any  certificate  of  de- 
posit, draws  any  order  or  bill  of  exchange,  makes  any  acceptance, 
assigns  any  note,  bond,  draft,  bill  of  exchange,  mortgage,  judgment, 
or  decree;  or  who  makes  any  false.  ^];itry  in  any  book,  report,  or 
statement  of  the  association,  with  intent,  in  either  case,  to  injure 
or  defraud  the  association  or  any  other  company,  body  politic  or 
corporate,  or  any  individual  person,  or  to  deceive  any  officer  of 
the  association,  or  any  agent  appointed  to  examine  the  affiairs  of 
any  such  association ;  and  every  person  who  with  like  intent  aids  or 
abets  any  officer,  clerk,  or  agent  in  any  violation  of  this  section, 
shall  be  deemed  guilty  of  a  misdemeanor,  and  shall  be  imprisoned 
not  less  than  ^Ye  years  nor  more  than  ten.  (Kev.  Stat.  U.  S.  Sec. 
5209.) 

Intent. — ^An  Intent  to  defraud  or  injure  the  bank  is  an  essential  in- 
gredient of  every  offense  specified  in  this  section.  (McKnight  v.  United 
States,  115  Fed.  Rep.,  972;  54  C.  C.  A.,  358.)  And  for  the  purpose  of 
showing  the  intent,  evidence  of  other  transactions  of  similar  character 


178 

is  admissible,  but  may  be  considered  by  the  jury  only  on  the  question  of 
the  knowledge  and  intent  of  the  accused  when  he  committed  the  acts 
charged  in  the  indictment.  (United  States  v.  Breese,  131  Fed.  Rep.,  916.) 
But  the  intent  to  injure  or  defraud  need  not  necessarily  have  been  the 
object  or  purpose  with  which  the  act  was  done;  it  is  sufficient  if  the 
natural  and  necessary  effect  of  the  act  was  to  injure  or  defraud  the 
bank  or  others,  and  it  was  willfully  and  intentionally  done.  (United 
States  V.  Breese,  131  Fed.  Rep.,  916.)  If  the  acts  charged  are  proved, 
the  intent  must  be  inferred  therefrom,  and  while  such  inference  or  pre- 
sumption is  not  conclusive,  it  throws  the  burden  of  proof  upon  the 
defendant.    (United  States  v.  German,  115  Fed.  Rep.,  987.) 

Willful  Misapplication  and  Abstraction. — The  words  "  willfully 
misapplies  "  are  new  in  statutes  creating  offenses,  and  they  are  not  used 
in  describing  any  offense  at  common  law.  They  have  no  settled  techni- 
cal meaning  like  the  word  **  embezzle  "  as  used  in  the  statutes,  or  the 
words  "  steal,  take,  and  carry  away  "  as  used  at  common  law.  (United 
States  V.  Britton,  107  U.  S.,  655.)  To  constitute  the  offense  the  misap- 
plication must  have  been  for  the  use  or  benefit  of  the  party  charged, 
or  of  some  person  or  company  other  than  the  bank,  with  intent  to 
injure  and  defraud  the  bank,  or  some  other  body  corporate,  or  some 
natural  person.  (Id.)  It  is  something  different  from  the  acts  of  official 
maladministration  referred  to  in  Section  5239.  (Id.)  It  is  not  neces- 
sary that  the  person  charged  with  the  offense  should  have  been  previ- 
ously in  the  actual  possession  of  such  moneys,  funds,  and  credits  under 
or  by  virtue  of  any  trust,  duty,  or  employment  committed  to  him.  Nor 
is  it  necessary  to  the  commission  of  this  offense  that  the  officer  making 
the  willful  misapplication  should  derive  any  personal  benefit  therefrom. 
When  the  funds  or  assets  of  the  bank  are  unlawfully  taken  from  its 
possession,  and  afterward  willfully  misapplied  by  converting  them  to 
the  use  of  any  person  other  than  the  bank,  with  intent  to  injure  and 
defraud,  the  offense,  as  described  in  the  statute,  is  committed.  (United 
States  V.  Harper,  33  Fed.  Rep.,  471;  United  States  v.  Breese,  131  Fed. 
Rep.,  915.)  The  act  may  be  done  directly  and  personally,  or  it  may  be 
done  indirectly  through  the  agency  of  another.  If  the  officer  charged 
with  it  has  such  control,  direction,  and  power  of  management  by  virtue 
of  his  relation  to  the  bank  as  to  direct  an  application  of  its  funds  In 
such  manner  and  under  such  circumstances  as  to  constitute  the  offense 
of  willful  misapplication,  and  actually  makes  such  direction,  or  causes 
such  misapplication  to  be  made,  he  is  equally  guilty  as  if  it  was  done 
by  his  own  hands.  (United  States  v.  Harper,  33  Fed.  Rep.,  471;  United 
States  V.  Fish,  24  Fed.  Rep.,  585.)  A  loan  made  in  bad  faith,  and  with 
the  Intention  of  defrauding  the  bank,  is  a  wilful  misapplication  of  its 
funds.  (United  States  V.  Fish,  sttpra.)  So  is  the  allowance  of  a  fraudu- 
lent overdraft.  (In  re  Van  Campen,  2  Benedict,  419.)  And  a  bank 
president  has  no  right  to  permit  overdrafts,  when  he  does  not  believe, 


179 

and  has  no  reasonable  grounds  to  believe,  that  the  moneys  can  be  re- 
paid; and  if  coupled  with  such  wrongful  act,  the  proof  establishes  that 
he  intended  by  the  transaction  to  injure  and  defraud  the  bank,  the 
wrongful  act  becomes  a  crime.  (Coffin  v.  United  States,  162  U.  S.,  664.) 
But  the  mere  fact  of  the  payment  by  the  officers  of  a  National  bank  of 
a  check  which  creates  an  overdraft  does  not  necessarily  constitute  a 
fraudulent  misapplication  of  the  funds  of  the  bank.  (Dow  v.  United 
States,  82  Fed.  Rep.,  904.)  The  procuring  of  a  dividend  to  be  declared 
by  the  bank  when  there  are  no  net  profits  to  pay  it  is  not  such  an  of- 
fense. (United  States  v.  Britton,  108  U.  S.,  199.)  Nor  to  allow  a  customer 
indebted  to  the  bank  to  withdraw  his  deposit,  though  such  act  might 
be  an  act  of  maladministration  on  the  part  of  the  officer,  and  a  gross 
neglect  of  official  duty.  (United  States  v.  Britton,  108  U.  S.,  193.)  Nor 
for  an  officer  to  procure  the  discounting  by  the  bank  of  his  own  note, 
though  he  and  the  other  parties  to  the  note  are  insolvent.  (Id.)  It 
is  no  defense  that  the  funds  were  misapplied  with  the  consent  of 
some  of  the  directors;  but  the  intent  to  defraud  will  be  conclusively 
presumed  from  the  commission  of  the  offense.  (United  States  v, 
Taintor,  11  Blatchford,  374;  Breese  v.  United  States,  106  Fed.  Rep., 
680.) 

False  Entbies-— -Any  entry  on  the  books  of  the  bank  which  is  inten- 
tionally made  to  represent  what  is  not  true,  with  intent  either  to  de- 
fraud the  bank  or  to  deceive  its  officers,  is  a  false  entry  within  the 
meaning  of  this  section.  (Agnew  v.  United  States,  165  U.  S.,  36;  United 
States  V.  Harper,  33  Fed.  Rep.,  471.)  If  the  false  entry  is  calculated  to 
deceive,  the  making  of  it  in  the  books  of  the  bank,  with  intent  to 
deceive,  is  all  that  is  necessary  to  bring  the  act  within  the  meaning 
of  the  statute;  and  the  fact  that  the  act  was  not  an  adroit  and  skillful 
one  does  not  relieve  it  of  its  criminal  character.  (United  States  v. 
Britton,  107  U.  S.,  655.)  The  erasure  of  figures  already  written  in  the 
books  of  the  bank,  and  the  substitution  of  other  figures  which  falsify 
the  state  of  the  account,  are  a  false  entry.  (United  States  v.  Crecelius, 
34  Fed.  Rep.,  30.)  The  entries  may  be  made  either  personally  or  by 
direction.  (Agnew  v.  United  States,  165  U.  S.,  36;  United  States  v. 
Harper,  33  Fed.  Rep.,  471;  In  re  Van  Campen,  2  Benedict,  419;  United 
States  V.  Allen,  47  Fed.  Rep.,  696;  Scott  v.  United  States,  130  Fed.  Rep., 
429.)  The  entry  upon  the  books  of  the  bank  from  deposit  slips,  which 
contain  false  statements,  is  a  false  entry  within  the  statute.  (Agnew  v. 
United  States,  165  U.  S.,  36.)  But  it  is  not  merely  the  making  of  false 
entries  which  is  criminal,  but  the  making  them  with  intent  to  deceive 
such  persons  as  those  named  in  the  statute.  (United  States  v.  Means, 
42  Fed.  Rep.,  599.)  A  mere  mistake,  made  inadvertently,  or  even 
through  negligence,  though  in  fact  false,  if  believed  by  the  officer 
making  it  to  be  true,  will  not  constitute  the  offense.  (United  States  v. 
Graves,  53  Fed.  Rep.,  700;  United  States  v.  Allen,  47  Fed.  Rep.,  696.) 


180 

Intention  to  deceive  any  one  director  or  officer  is  as  criminal  under  this 
section  as  the  intention  to  deceive  any  number  or  all  of  them.  (United 
States  V.  Means,  42  Fed.  Rep.,  599.)  And  the  statute  does  not  require 
that  any  person  should  have  been  in  fact  defrauded  or  actually  deceived 
by  the  false  entry  in  order  to  make  the  crime  complete;  if  there  was 
an  attempt  to  deceive,  and  the  false  entry  was  knowingly  entered,  and 
was  a  false  entry  which  was  naturally  and  necessarily  calculated  to  mis- 
lead, this  would  be  sufficient,  in  the  absence  of  contravening  proof  to 
authorize  a  finding  that  the  person  making  it  made  it  with  intent  to 
deceive.  (United  States  v.  Graves,  53  Fed.  Rep.,  700.)  But  if  the 
officers  alleged  to  have  been  deceived  were  accomplices  in  the  fraudulent 
speculations  which  the  false  entries  were  made  to  hide,  an  intent  to 
deceive  them  cannot  be  inferred.  (United  States  v.  Means,  42  Fed. 
Rep.,  599.) 

False  entries  in  a  report  made  by  the  President  and  transmitted  to 
the  Comptroller  of  the  Currency  constitute  this  offense,  though  the 
report  was  not  called  for  by  the  Comptroller.  (United  States  v. 
Hughitt,  45  Fed.  Rep.,  47.)  A  false  statement  is  a  crime  though  done 
to  save  the  bank.  (United  States  v.  Means,  42  Fed.  Rep.,  599.)  Di- 
rectors are  officers  within  the  meaning  of  the  statute.  (United  States  v. 
Means,  42  Fed.  Rep.,  599.) 

It  is  no  defense  that  the  entries  were  made  by  a  clerk  and  verified 
by  the  officer  without  actual  knowledge  of  their  truth,  since  it  was  his 
duty  to  inform  himself.     (United  States  v.  Allen,  47  Fed.  Rep.,  696.) 

The  assistant  cashier  is  indictable  under  this  section  for  making  a 
false  entry  in  a  report  to  the  Comptroller,  although  he  is  not  one  of  the 
officers  authorized  by  Section  5211  to  make  such  a  report;  for  he  may 
be  regarded  as  within  the  category  of  "  clerk  or  agent,"  within  the 
terms  of  this  section.  (Cochran  v.  United  States,  157  U.  S.,  286.)  The 
president  and  assistant  cashier  are  indictable  as  principals,  under  this 
section,  for  making  a  false  entry  in  a  report,  although  neither  of  them 
actually  signed  or  attested  the  report.  {Id.)  Where  false  entries  were 
made  by  a  bookkeeper  in  a  statement  requested  by  a  National-bank 
examiner  purporting  to  give  the  balance  due  to  depositors,  which  state- 
ment it  was  the  duty  of  the  examiner  to  make  and  not  the  book- 
keeper, an  indictment  for  making  "  false  entries  in  a  statement  of  the 
association  "  will  not  be  sustained.  (United  States  v.  Ege,  49  Fed.  Rep., 
852.) 

When  the  managers  of  a  National  bank  make  arrangements  with 
depositors  in  the  bank  to  give  them  credit  at  the  bank  for  larger  sums 
than  appear  upon  the  credit  side  of  their  accounts  up  to  specified 
amounts  and  for  a  fixed  time,  and  the  proper  officers  of  the  bank  make 
entries  thereof  in  the  books  of  the  bank  in  good  faith  and  in  the  belief 
that  they  have  a  right  to  do  so,  such  an  entry  is  not  a  false  entry  within 
the  meaning  of  that  term  as  used  in  Rev.  Stat.  Sec.  5209,  and  the 
person  so  making  it  is  not  guilty  of  a  violation  of  that  statute  in  so 


181 

doing.  (Graves  v.  United  States,  165  U.  S.,  323.)  If  an  overdraft  is 
made  and  allowed  under  circumstances  making  it  a  fraud  upon  the 
bank,  the  entry  of  the  transaction  just  as  it  occurred  on  the  books  of 
the  bank  is  not  a  false  entry  under  this  section.  (Dow  v.  United 
States,  82  Fed.  Rep.,  904.) 

Forgery  by  an  oflBcer  of  a  National  bank  for  the  purpose  of  defrauding 
the  bank  or  its  stockholders  does  not  constitute  the  offense  described  in 
Section  5418,  Rev.  Stat.,  and  is  not  an  offense  against  the  United  States, 
cognizable  only  by  the  Federal  courts.  (Cross  v.  State  of  North  Caro- 
lina, 132  U.  S.,  131.) 

FoBM  OF  Repobt. — A  National  bank  is  not  required  to  conform  the 
headings  of  the  various  accounts  on  its  books  to  any  prescribed  names, 
nor  to  the  names  stated  in  the  form  of  report  prescribed  by  the  Comp- 
troller, and  therefore  when  a  report  is  called  for,  if  the  person  making 
it  enters,  under  the  headings  in  the  prescribed  form,  a  statement  of  the 
bank's  condition  which  is  true  with  respect  to  the  headings  in  said 
form,  he  has  fulfilled  the  Remands  of  the  law.  (United  States  v.  Graves, 
53  Fed.  Rep.,  634.) 

But  where  the  form  of  report,  as  prescribed  by  the  Comptroller,  con- 
tains headings  of  "  Loans  and  Discounts,"  and  also  of  "  Overdrafts,"  it 
is  the  duty  of  the  bank  officer  to  make  his  entries  in  such  report  in 
such  manner  that  each  of  these  headings  shall  truthfully  state  the  con- 
dition of  his  bank  as  to  such  heading.  (United  States  v.  Graves,  53 
Fed.  Rep.,  634.)  It  is  not  a  "  false  entry  "  to  enter  under  heading  of 
**  Loans  and  Discounts  "  items  which,  on  books  of  the  bank,  and  for  con- 
venience of  its  officers,  have  been  temporarily  withdrawn  from  that 
heading,  and  which  are,  from  day  to  day,  carried  on  the  books  of  the 
bank  under  heading  of  "  Suspended  loans  "  while  awaiting  action  of 
directors  as  to  same  being  withdrawn  from  character  of  loans  and 
entered  up  as  a  loss  on  profit  and  loss  account.  (Id.)  The  "  liabilities," 
which  are  required  by  this  section  to  be  stated  in  the  reports  to  the 
Comptroller,  include  contingent  as  well  as  absolute  liabilities;  and 
hence  an  unmatured  note,  pajnment  of  which  at  maturity  is  guaranteed 
by  the  bank,  should  be  included  in  the  list  of  liabilities.  (Cochran  v. 
United  States,  157  U.  S.,  286.) 

As  a  director  is  personally  liable  to  the  bank  on  paper  made  to  it 
by  a  firm  of  which  he  is  a  member,  the  amount  of  such  paper  should 
be  entered  under  the  heading  of  "  Liabilities  of  directors  (individual 
and  firm)  as  payers."  (United  States  v.  Graves,  63  Fed.  Rep.,  634.) 
The  entry  of  "  Loans  and  Discounts  "  in  reports  to  the  Comptroller  does 
not  guarantee  the  solvency  of  the  makers  of  the  paper,  but  is  a  state- 
ment that  in  truth  and  fact,  at  the  date  named  in  the  report,  the  bank 
actually  held  and  owned  loans  and  discounts  to  the  aggregate  so 
reported.     (7(2.) 


182 

Aiding  and  Abetting. — Persons  who  are  not  officers  or  agents  of  the 
hank  may  be  aiders  and  abetters  of  the  officers  in  the  violation  of  this 
section.    (Coffin  v.  United  States,  162  U.  S.,  664.) 

When  Ceiminal  Laws  of  State  Apply. — ^As  the  offense  of  embezzle- 
ment of  the  funds  and  property  of  the  bank  are  provided  for  in  the 
National  banking  law,  an  officer  of  the  bank  cannot  be  indicted  there- 
for under  State  laws,  nor  have  the  State  courts  jurisdiction  of  such 
offense.  (Commonwealth  v.  Ketner,  92  Pa.  St.,  372;  Commonwealth  v. 
Felton,  101  Mass.,  204.)  But  where  the  property  fraudulently  converted 
belongs  to  the  customers  of  the  bank,  as,  for  instance,  property  left  on 
special  deposit,  the  criminal  laws  of  the  State  apply.  (State  v.  Tuller, 
34  Conn.,  280;  Commonwealth  v.  Tenney,  97  Mass.,  50.)  In  State  v. 
Tuller  it  was  said:  "That  provision  [in  respect  to  embezzlement]  goes 
to  the  being  an  internal  working  of  the  bank,  and  is  intended  to  pro- 
tect its  property  from  its  agents.  It  was  not  intended  to  regulate,  and 
has  not  the  effect  of  regulating  the  business  of  the  bank  with  its  cus- 
tomers. Now,  the  business  of  the  bank  is  conducted  within  the  jurisdic- 
tion of  this  State  with  our  citizens  and  in  conformity  with  our  laws, 
and  it  is  competent  for  the  legislature  to  pass  any  laws  affecting  that 
business,  or  protect  the  bank  or  its  customers  in  the  conduct  of  that 
business  by  any  penalty,  and  such  law  and  penalty  will  not  be  pre- 
dicated on  any  law  or  offense  created  by  Congress  or  have  any  relation 
or  be  repugnant  to  the  currency  act,  or  in  any  manner  infringe  the  juris- 
diction of  Congress  or  the  Federal  courts.  It  is  theft  by  our  law  to 
steal  from  a  National  bank;  it  is  burglary  to  break  Into  one  for  the 
purpose  of  stealing,  and  it  is  cheating  to  obtain  money  from  one  by 
false  pretenses.  As  a  corporate  being  located  in  the  State  its  property 
and  interests  and  business  are  protected  by  State  laws  and  subject  to 
State  legislation,  and  so  it  is  competent  for  the  legislature  to  protect  its 
customers,  the  citizens  of  the  State,  in  their  business  dealings  with  it, 
whatever  they  may  be,  whether  constituting  the  relation  of  borrower 
and  lender  or  of  special  or  general  depositor  and  bailee;  and  they  may 
be  controlled  and  protected  by  penal  enactments  without  interference 
with  the  laws  of  Congress." 

Larceny  of  the  funds  or  property  of  the  bank  is  punishable  under 
State  laws.  (Commonwealth  v.  Barry,  116  Mass.,  1.)  And  an  officer 
of  a  National  bank  may  be  indicted  for  forgery  under  State  laws,  al- 
though such  forgery  might  have  been  committed  in  order  that  the  in- 
strument forged  might  thereafter  become  the  basis  of  false  entries  upon 
the  books  of  the  bank,  within  this  section.  (Cross  v.  State  of  North 
Carolina,  132  U.  S.,  131.)  So  an  officer  of  the  bank  may  be  indicted 
under  a  State  statute  for  making  false  and  fraudulent  entries  in  the 
books  of  the  bank,  such  offense  amounting  to  forgery  at  common  law. 
(Luberg  v.  Commonwealth,  94  Pa.  St.,  85.)  But  the  State  courts  have 
no  jurisdiction  of  the  crime  of  "  false  entries "  as  defined  by  this 


183 

section.  (In  re  Eno,  54  Fed.  Rep.,  669.)  A  State  statute  forbidding 
banks  to  receive  deposits  when  the  bank  is  insolvent,  and  making  such 
action  a  penal  offense  on  the  part  of  the  officers  of  th«  bank,  can  have 
no  application  to  National  banks  located  in  such  State.  (Easton  v. 
State  of  Iowa,  188  U.  S.,  220;  Slaughter  v.  First  National  Bank,  109  Ala., 
157;  State  v.  Menke,  56  Kans.,  77;  Contra  State  v.  Fields  (Iowa),  62  N. 
W.  Rep.,  653;  State  v.  Easton,  113  Iowa,  516;  State  v.  Bardwell,  72 
Miss.,  535.)  Prior  to  the  Act  of  February  26,  1881,  a  notary  public  hold- 
ing his  commission  under  a  State  had  no  authority  to  administer  the 
oath  required  by  Section  5211,  Rev.  St.;  and,  therefore,  a  cashier  who 
made  oath  before  such  notary  to  a  false  statement  of  the  condition  of 
his  bank  was  not  guilty  of  perjury.  (United  States  v.  Curtis,  107  U. 
S.,  671.) 

Indictment — Form  of — ^Allegations  in. — An  indictment  for  a  misap- 
plication of  the  funds  of  a  National  bank  must  specify  the  particulars  of 
the  application,  so  as  to  show  the  application  charged  to  be  a  criminal 
misapplication  as  distinguished  from  applications  that  are  unlawful, 
but  not  criminal.  (United  States  v.  Eno,  56  Fed.  Rep.,  218;  United 
States  V.  Warner,  26  Fed.  Rep.,  616;  Batchelor  v.  United  States,  156  U. 
S.,  426.)  Hence  an  allegation  that  the  defendant,  for  the  use,  benefit, 
and  advantage  of  himself,  misapplied  certain  moneys  of  the  bank  by 
paying  them  to  A  &  Co.  is  not  sufficient;  for  it  does  not  show  that  such 
payment  was  criminal;  but  the  facts  showing  that  the  payment  to  A 
was  not  only  unlawful,  but  a  criminal  application  of  the  money,  should 
be  stated.  (United  States  v.  Eno,  56  Fed.  Rep.,  218.)  But  if  the  indict- 
ment describes  specifically  the  funds  misapplied,  and  the  manner  of 
the  misapplication,  it  need  not  negative  every  possible  theory  consistent 
with  an  honest  purpose  in  the  disposition  of  the  funds  specified. 
(Evans  v.  United  States,  153  U.  S.,  608.)  And  an  indictment  for  aiding 
and  abetting  an  officer  in  misapplying  the  funds  of  the  bank  and  making 
false  entries  in  its  books  need  not  specifically  set  out  the  act  or  acts 
by  which  the  aiding  and  abetting  were  consummated.  (Coffin  v.  United 
States,  162  U.  S.,  664.)  In  an  indictment  for  willful  misapplication  of 
the  funds  of  the  bank  it  is  not  necessary  to  charge  that  the  funds  had 
been  previously  intrusted  to  defendant,  since  such  act  may  be  done  by 
an  officer  or  agent  of  the  bank  without  his  having  previously  received 
the  funds  into  his  manual  possession.  (United  States  v.  North  way,  129 
U.  S.,  327.)  In  an  indictment  for  embezzlement  of  moneys,  etc.,  it  is  not 
necessary  to  specify  what  portion  was  money,  and  what  portion  was 
Other  funds  or  credits.    (Breese  v.  United  States,  106  Fed.  Rep.,  680.) 

An  indictment  for  making  a  false  entry  in  a  report  to  the  Comptroller 
need  not  allege  that  such  report  was  made  by  the  banking  association, 
or  that  it  was  actuaJly  verified  by  the  oath  or  affirmation  of  the  presi- 
dent or  cashier,  or  attested  by  the  directors,  as  required  by  Section 
5211;  but  It  is  sufficient  to  aver  that  the  defendant  made  such  false 
14 


184 

entry  in  a  certain  report  of  the  condition  of  the  bank,  .  .  .  made 
to  the  Comptroller  of  the  Currency  in  accordance  with  the  provisions  of 
Section  5211.  (Cochran  v.  United  States,  157  U.  S.,  286.)  And  it  is 
sufficient  if  the  Indictment  allege  the  substance  of  the  reports  in  ques- 
tion without  setting  them  out  in  full.  (United  States  v.  French,  57 
Fed.  Rep.,  382.)  It  is  not  necessary  to  allege  specifically  that  the  re- 
ports were  transmitted  to  the  Comptroller  of  the  Currency,  or  that  they 
were  published.     (United  States  v.  Potter,  56  Fed.  Rep.,  83.) 

Embezzlement,  abstraction,  and  willful  misapplication  of  the  moneys, 
funds,  etc.,  of  a  National  bank,  as  described  in  this  section,  constitute 
three  separate  crimes  or  offenses,  which,  under  Rev.  St.,  Sec.  1024,  may 
be  joined  in  one  indictment,  but  must  be  stated  in  separate  accounts. 
(United  States  v.  Cadwallader,  59  Fed.  Rep.,  677.)  But  an  averment  in 
an  indictment  against  an  officer  and  agent  of  a  National  bank  that  de- 
fendant "  did  steal,  abstract,  take  and  carry  away  "  property  of  the  asso- 
ciation, does  not  charge  two  offenses.  (United  States  v.  Jewett,  84  Fed. 
Rep.,  142.)  And  an  indictment  charging  embezzlement  and  abstraction 
of  the  property  of  a  National  bank  is  not  demurrable  because  it  charges 
the  receipt  of  property  by  the  defendant  in  different  capacities,  both  as 
an  officer  and  as  an  agent  of  the  bank.    (Id.) 

An  allegation  that  defendant,  an  officer  and  agent  of  a  National  bank- 
ing association,  did  secretly,  in  a  manner  and  by  particulars  to  the 
jurors  unknown,  willfully,  unlawfully  and  fraudulently  convert  to  his 
own  use,  and  misapply,  from  said  association  to  himself,  certain  funds, 
sufficiently  charges  the  offence  of  "  willful  misapplication  "  of  property, 
under  this  section.    (United  States  v.  Jewett,  84  Fed.  Rep.,  142.) 

Agent  in  Liquidation. — This  section  applies  to  an  agent  In  liquida- 
tion appointed  by  the  stockholders.  (United  States  v.  Jewett,  84  Fed. 
Rep.,  142.) 

§  170.  Illegal  Certification  of  Check. — That  any  officer,  clerk,  or 
agent  of  any  National  banking  association  who  shall  willfully 
violate  the  provisions  of  an  act  entitled,  "An  Act  in  reference  to 
certifying  checks  by  National  banks,"  approved  March  third, 
eighteen  hundred  and  sixty-nine,  being  section  fifty-two  hundred 
and  eight  of  the  Eevised  Statutes  of  the  United  States,  or  who  shall 
resort  to  any  device,  or  receive  any  fictitious  obligation,  direct  or 
collateral,  in  order  to  evade  the  provisions  thereof,  or  who  shall 
certify  checks  before  the  amount  thereof  shall  have  been  regularly 
entered  to  the  credit  of  the  dealer  upon  the  books  of  the  banking 
association,  shall  be  deemed  guilty  of  a  misdemeanor,  and  shall, 
on  conviction  thereof  in  any  circuit  or  district  court  of  the  United 
States,  be  fined  not  more  than  five  thousand  dollars,  or  shall  be 


185 

imprisoned  not  more  than  five  years,  or  both,  in  the  discretion  of 
the  court.  (Act  July  12,  1882,  Ch.  290,  Sec.  13;  22  Stat.  U.  S. 
162.) 

To  constitute  a  criminal  certification  of  a  check  by  an  officer  of  a 
National  bank,  it  is  not  necessary  that  he  should  himself  deliver  the 
check  to  some  person  outside  of  the  bank,  or  that  he  should  take  any 
part  in  such  delivery;  but  the  offense  would  be  complete  if,  after  he 
had  written  the  words  of  certification,  the  actual  delivery  is  made  by 
some  clerk  or  other  officer  of  the  bank  without  his  knowledge.  (Potter 
V,  United  States,  155  U.  S.,  438.)  To  constitute  the  offense  the  certifica- 
tion must  have  been  "willful."  (Id.)  Where  there  is  evidence  tend- 
ing to  show  a  positive  agreement  on  the  part  of  the  officers  of  the  bank 
that  the  overdraft  caused  by  such  certified  check  should  be  practically 
treated  as  a  loan  from  day  to  day,  secured  by  ample  collateral,  and 
that  before  such  certified  check  issued  there  was  deposited  in  advance 
an  ample  amount  of  cash,  such  evidence  must  be  submitted  to  the  jury, 
on  the  question  of  criminal  intent.     Ud.) 

§  171.  Obligations  of  the  United  States  Defined. — The  words 
"  obligation  or  other  security  of  the  United  States  "  shall  be  held 
to  mean  all  bonds,  certificates  of  indebtedness,  National  bank  cur- 
rency, coupons.  United  States  notes,  Treasury  notes,  fractional 
notes,  certificates  of  deposit,  bills,  checks  or  drafts  for  money, 
drawn  by  or  upon  authorized  officers  of  the  United  States,  stamps 
and  other  representatives  of  value,  of  whatever  denomination, 
which  have  been  or  may  (be)  issued  under  any  act  of  Congress. 
(Eev.  Stat.  U.  S.  Sec.  5413.) 

§  172.  Forging  and  Counterfeiting  National  Bank  Notes. — 
Every  person  who  falsely  makes,  forges,  or  counterfeits,  or  causes 
or  procures  to  be  made,  forged  or  counterfeited,  or  willingly  aids  or 
assists  in  falsely  making,  forging  or  counterfeiting,  any  note  in 
imitation  of  or  purporting  to  be  in  imitation  of,  the  circulating 
notes  issued  by  any  banking  association  now  or  hereafter  authorized 
and  acting  under  the  laws  of  the  United  States;  or  who  passes, 
utters,  or  publishes,  or  attempts  to  pass,  utter,  or  publish,  any  false, 
forged,  or  counterfeited  note,  purporting  to  be  issued  by  any  such 
association  doing  a  banking  business,  knowing  the  same  to  be  falsely 
made,  forged,  or  counterfeited,  or  who  falsely  alters,  or  causes  or 
procures  to  be  falsely  altered,  or  willingly  aids  or  assists  in  falsely 


186 

altering  any  sucli  circulating  notes,  or  passes,  utters,  or  publishes, 
or  attempts  to  pass,  utter,  or  publish  as  true,  any  falsely  altered  or 
spurious  circulating  note  issued,  or  purporting  to  have  been  issued, 
by  such  banking  association,  knowing  the  same  to  be  falsely  altered 
or  spurious,  shall  be  imprisoned  at  hard  labor  not  less  than  five 
years  nor  more  than  fifteen  years,  and  fined  not  more  than  one 
thousand  dollars.     (Rev.  Stat.  U.  S.  5415.) 

§  173.  Wrongful  Use  of  Plates — ^False  Plates,  Notes,  etc. — ^Every 
person  having  control,  custody,  or  possession  of  any  plate,  or  any 
part  thereof,  from  which  has  been  printed,  or  which  may  be  pre- 
pared by  direction  of  the  Secretary  of  the  Treasury  for  the  purpose 
of  printing,  any  obligation  or  other  security  of  the  United  States, 
who  uses  such  plate,  or  knowingly  suffers  the  same  to  be  used  for 
the  purpose  of  printing  any  such  or  similar  obligation,  or  other 
security,  or  any  part  thereof,  except  as  may  be  printed  for  the  use 
of  the  United  States  by  order  of  the  proper  officer  thereof;  and 
every  person  who  engraves,  or  causes  or  procures  to  be  engraved,  or 
assists  in  engraving,  any  plate  in  the  likeness  of  any  plate  designed 
for  the  printing  of  such  obligation  or  other  security,  or  who  sells 
any  such  plate,  or  who  brings  into  the  United  States  from  any 
foreign  place  any  such  plate,  except  under  the  direction  of  the 
Secretary  of  the  Treasury  or  other  proper  officer,  or  with  any  other 
intent,  in  either  case,  than  that  such  plate  be  used  for  the  printing 
of  the  obligations  or  other  securities  of  the  United  States;  or  who 
has  in  his  control,  custody,  or  possession  any  metallic  plate  en- 
graved after  the  similitude  of  any  plate  from  which  any  such 
obligation  or  other  security  has  been  printed,  with  intent  to  use 
such  plate,  or  suffer  the  same  to  be  used  in  forging  or  counterfeit- 
ing any  such  obligation  or  other  security,  or  any  part  thereof;  or 
who  has  in  his  possession  or  custody,  except  under  authority  from 
the  Secretary  of  the  Treasury  or  other  proper  officer,  any  obliga- 
tion or  other  security,  engraved  and  printed  after  the  similitude  of 
any  obligation  or  other  security  issued  under  the  authority  of  the 
United  States,  with  intent  to  sell  or  otherwise  use  the  same;  and 
every  person  who  prints,  photographs,  or  in  any  other  manner 
makes  or  executes,  or  causes  to  be  printed,  photographed,  made  or 
executed,  or  aids  in  printing,  photographing,  making,  or  executing 


187 

any  engraving,  photograph,  print,  or  impression  in  the  likeness  of 
any  such  obligation  or  other  security,  or  any  part  thereof,  or  who 
sells  any  such  engraving,  photograph,  print,  or  impression,  except 
to  the  United  States,  or  who  brings  into  the  United  States  from 
any  foreign  place  any  such  engraving,  photograph,  print,  or  im- 
pression, except  by  direction  of  some  proper  officer  of  the  United 
States,  or  who  has  or  retains  in  his  control  or  possession,  after  a 
distinctive  paper  has  been  adopted  by  the  Secretary  of  the  Treasury 
for  the  obligations  and  other  securities  of  the  United  States,  any 
similar  paper  adapted  to  the  making  of  any  such  obligation  or 
other  security,  except  under  the  authority  of  the  Secretary  of  the 
Treasury  or  some  other  proper  officer  of  the  United  States,  shall  be 
punished  by  a  fine  of  not  more  than  five  thousand  dollars,  or  by  im- 
prisonment at  hard  labor  not  more  than  fifteen  years,  or  by  both. 
(Kev.  Stat.  U.  S.  Sec.  5430.) 

Notes  issued  by  a  State  bank  are  not  obligations  issued  under  au- 
thority of  the  United  States  within  the  meaning  of  this  section. 
(United  States  v.  Conners,  111  Fed.  Rep.,  734.) 

§  174.  Passing,  Selling,  etc.,  Counterfeits. — Every  person  who, 
with  intent  to  defraud,  passes,  utters,  publishes,  or  sells,  or  at- 
tempts to  pass,  utter,  publish,  or  sell,  or  brings  into  the  United 
States  with  intent  to  pass,  publish,  utter,  or  sell,  or  keeps  in  pos- 
session or  conceals  with  like  intent  any  falsely  made,  forged, 
counterfeited,  or  altered  obligation,  or  other  security  of  the  United 
States,  shall  be  punished  by  a  fine  of  not  more  than  five  thousand 
dollars,  and  by  imprisonment  at  hard  labor  not  more  than  fifteen 
years.     (Kev.  Stat.  U.  S.  Sec.  5431.) 

§  175.  Taking  Impressions  of  Plates,  etc. — Every  person  who, 
without  authority  from  the  United  States,  takes,  procures,  or 
makes,  upon  lead,  foil,  wax,  plaster,  paper,  or  any  other  substance 
or  material,  an  impression,  stamp,  or  imprint  of,  from,  or  by  the 
use  of  any  bed-plate,  bed-piece,  die,  roll,  plate,  seal,  type,  or  other 
tool,  implement,  instrument,  or  thing  used  or  fitted  or  intended  to  be 
used  in  printing,  stamping,  or  impressing,  or  in  making  other  tools, 
implements,  instruments,  or  things,  to  be  used,  or  fitted  or  in- 


188 

tended  to  be  used,  in  printing,  stamping,  or  impressing  any  kind 
or  description  of  obligation  or  other  security  of  the  United  States, 
now  authorized  or  hereafter  to  be  authorized  by  the  United  States, 
or  circulating  note  or  evidence  of  debt  of  any  banking  association 
under  the  laws  thereof,  shall  be  punished  by  imprisonment  at  hard 
labor  not  more  than  ten  years,  or  by  a  fine  of  not  more  than  five 
thousand  dollars,  or  both.     (Rev.  Stat.  U.  S.  Sec.  5432.) 

§  176.  Persons  Having  Impressions,  etc.,  in  Their  Possession. — 
Every  person  who,  with  intent  to  defraud,  has  in  his  possession, 
keeping,  custody,  or  control,  without  authority  from  the  United 
States,  any  imprint,  stamp,  or  impression,  taken  or  made  upon  any 
substance  or  material  whatsoever,  of  any  tool,  implement,  instru- 
ment, or  thing,  used  or  iitted  or  intended  to  be  used,  for  any  of 
the  purposes  mentioned  in  the  preceding  section;  or  who,  with 
intent  to  defraud,  sells,  gives,  or  delivers  any  such  imprint,  stamp, 
or  impression  to  any  other  person,  shall  be  punished  by  imprison- 
ment at  hard  labor  not  more  than  ten  years,  or  by  a  fine  of  not 
more  than  five  thousand  dollars.     (Rev.  Stat.  U.  S.  Sec.  5433.) 

§  177.  Buying,  Selling,  etc.,  Counterfeits,  etc. — Every  person 
who  buys,  sells,  exchanges,  transfers,  receives,  or  delivers,  any  false, 
forged,  counterfeited  or  altered  obligation  or  other  security  of 
the  United  States,  or  circulating  note  of  any  banking  association 
organized  or  acting  under  the  laws  thereof,  which  has  been  or  may 
hereafter  be  issued  by  virtue  of  any  act  of  Congress,  with  the 
intent  that  the  same  be  passed,  published,  or  used  as  true  and  gen- 
uine, shall  be  imprisoned  at  hard  labor  not  more  than  ten  years,  or 
fined  not  more  than  five  thousand  dollars,  or  both.  (Rev.  Stat. 
U.  S.  Sec.  5434.) 

§  178.  Issuing,  etc.,  Notes  of  Closed  Banks. — In  all  cases  where 
the  charter  of  any  corporation  which  has  been  or  may  be  created 
by  act  of  Congress  has  expired  or  may  hereafter  expire,  if  any 
director,  officer,  or  agent  of  the  corporation,  or  any  trustee  thereof, 
or  any  agent  of  such  trustee,  or  any  person  having  in  his  possession 
or  under  his  control  the  property  of  the  corporation  for  the  pur- 
pose of  paying  or  redeeming  its  notes  and  obligations,  knowingly 


189 

'ssues,  reissues,  or  utters  as  money,  or  in  any  other  way  knowingly 
puts  in  circulation  any  bill,  note,  check,  draft,  or  other  security 
purporting  to  have  been  made  by  any  such  corporation  whose 
charter  has  expired,  or  by  any  officer  thereof,  or  purporting  to 
have  been  made  under  authority  derived  therefrom,  or  if  any  person 
knowingly  aids  in  any  such  act,  he  shall  be  punished  by  a  fine  of 
not  more  than  ten  thousand  dollars,  or  by  imprisonment  not  less 
than  one  year  nor  more  than  five  years,  or"  by  both  such  fine  and 
imprisonment.  But  nothing  herein  shall  be  construed  to  make  it 
unlawful  for  any  person,  not  being  such  director,  officer,  or  agent 
of  the  corporation,  or  any  trustee  thereof,  or  any  agent  of  such 
trustee,  or  any  person  having  in  his  possession  or  under  his  control 
the  property  of  the  corporation  for  the  purpose  hereinbefore  set 
forth,  who  has  received  or  may  hereafter  receive  such  bill,  note, 
check,  draft,  or  other  security,  bona  fide  and  in  the  ordinary 
transactions  of  business,  to  utter  as  money  or  otherwise  circulate 
the  same.    (Kev.  Stat.  U.  S.  Sec.  5437.) 

This  section  was  an  act  originally  passed  in  1837  to  apply  to  the 
second  Bank  of  the  United  States,  the  charter  of  which  had  then  just 
expired.  For  some  reason  or  other  the  compilers  embodied  this  old  act 
in  the  Revised  Statutes. 

§  179.  Receipt  of  Public  Money  When  Not  Authorized  De- 
positary.— Every  banker,  broker,  or  other  person  not  an  authorized 
depositary  of  public  moneys,  who  knowingly  receives  from  any 
disbursing  officer,  or  collector  of  internal  revenue,  or  other  agent 
of  the  United  States,  any  public  money  on  deposit,  or  by  way  of 
loan  or  accommodation,  with  or  without  interest,  or  otherwise 
than  in  payment  of  a  debt  against  the  United  States,  or  who  uses, 
transfers,  converts,  appropriates,  or  applies  any  portion  of  public 
money  for  any  purpose  not  prescribed  by  law,  and  every  president, , 
cashier,  teller,  director,  or  other  officer  of  any  bank  or  banking  asso- 
ciation, who  violates  any  of  the  provisions  of  this  section,  is  guilty 
of  an  act  of  embezzlement  of  the  public  money  so  deposited,  loaned, 
transferred,  used,  converted,  appropriated,  or  applied,  and  shall 
be  punished  as  prescribed  in  section  fifty-four  hundred  and  eighty- 
eight.     (Kev.  Stat.  U.  S.  Sec.  5497.) 


190 

It  will  be  seen  from  this  section  that  all  hanks  other  than  public 
depositaries  are  put  on  notice  in  regard  to  dealings  with  disbursing 
oflScers,  etc.,  of  the  United  States.  If  the  provisions  of  this  section  are 
violated,  such  violation  constitutes  embezzlement.  Sections  3639  and 
3651  of  the  Revised  Statutes  are  also  of  importance  to  bankers  in  this 
'X)nnection  as  having  reference  to  public  moneys. 


CHAPTER   VIII. 
SuiTs^  Jurisdiction  and  Evidence. 

Section  180.  Jurisdiction  of  Suits  By  and  Against  National  Banks. 

181.  Same  Subject — Federal  Courts. 

182.  Attachment,  etc..  Before  Final  Judgment  Prohibited. 

183.  Proceedings  to  Enjoin  Comptroller — Where  Had. 

184.  United  States  District  Attorney  to  Conduct  Suits. 

185.  Instruments  Certified  by  Comptroller  as  Evidence. 

186.  Certified  Copy  of  Organization  Certificate  as  Evidence. 

§  180.  Jurisdiction  of  Suits  By  and  Against  National  Banks. — 

That  the  jurisdiction  for  suits  hereafter  brought  by  or  against  any 
association  established  under  any  law  providing  for  National  bank- 
ing associations,  except  suits  between  them  and  the  United  States, 
or  its  officers  and  agents,  shall  be  the  same  as,  and  not  other  than, 
the  jurisdiction  for  suits  by  or  against  banks  not  organized  under 
any  law  of  the  United  States  which  do  or  might  do  banking  busi- 
ness where  such  National  banking  associations  may  be  doing  busi- 
ness when  such  suits  may  be  begun.  And  all  laws  and  parts  of 
laws  of  the  United  States  inconsistent  with  this  proviso  be,  and  the 
same  are  hereby,  repealed.  (Act  July  12, 1882,  Ch.  290,  Sec.  4;  22 
Stat.  U.  S.  162.) 

§  181.  Same  Snbject — ^Federal  Courts. — That  all  National  bank- 
ing associations  established  under  the  laws  of  the  United  States 
shall,  for  the  purposes  of  all  actions  by  or  against  them,  real, 
personal,  or  mixed,  and  all  suits  in  equity,  be  deemed  citizens  of  the 
States  in  which  they  are  respectively  located ;  and  in  such  cases  the 
circuit  and  district  courts  shall  not  have  jurisdiction  other  than 
such  as  they  would  have  in  cases  between  individual  citizens  of  the 
same  State.  The  provisions  of  this  section  shall  not  be  held  to 
affect  the  jurisdiction  of  the  courts  of  the  United  States  in  cases 
commenced  by  the  United  States  or  by  direction  of  an  officer 
thereof,  or  cases  for  winding  up  the  affairs  of  any  such  bank.  (Act 
Aug.  13, 1888,  Ch.  866,  Sec.  4;  25  Stat.  U.  S.  436.) 

191 


192 

General    Effect    of    this    Section — Change    in    Law. — The    effect 
of   these   enactments    is   to    repeal    the    tenth   subdivision   of    Section 
629,  Rev.  Stat.  U.  S.,  which  conferred  upon  the  Circuit  Court  of  the 
United   States   jurisdiction   of   all   suits   by   or   against   any   National 
banking  association  established   in  the  District  for  which   the   court 
was  held.     (National  Bank  of  Jefferson  v.  Fare,  25  Fed.  Rep.,  200.) 
The  change  in  the  law  affected  only  suits  brought  after  the  passage 
of  these  enactments.     (First  National  Bank  v.  Morgan,  132  U.  S.,  141.) 
National  banks  are  now  on  precisely  the  same  footing  as  individual  or 
other  corporations  with  respect  to  the  right  to  sue  or  be  sued  in  the 
Federal  courts.     (Peter  v.  Commercial  National  Bank,  142  U.  S.,  614.) 
And  now  a  cause  in  which  a  National  bank  is  a  party  defendant  cannot 
be  removed  into  a  Federal  court  on  the  mere  ground  that  the  defendant 
is  a  National  bank.     (Leather  Manufacturers'  National  Bank  v.  Cooper, 
120  U.  S.,  778;  Wichita  National  Bank  v.  Smith,  36  U.  S.  App.,  530.) 
And  a  Receiver  of  the  bank  who  is  substituted  as  a  party  in  place  of 
the  bank  has  no  greater  rights  in  this  respect  than  the  bank  itself. 
(Wichita  National  Bank  of  Wichita  v.  Smith,  36  U.  S.  App.,  530.)     The 
assets  of  an  insolvent  National  bank  are  not  brought  under  the  control 
or  protection  of  the  Federal  courts  by  being  taken  into  custody  by  a 
Receiver  appointed  by  the  Comptroller  of  the  Currency,  nor  by  the 
transfer  of  such  assets  from  the  Receiver  to  an  agent  of  the  stock- 
holders.    (Snohomish  County  v.  Puget  Sound  National  Bank,  81  Fed. 
Rep.,  518.) 

Federal  Questions — Diverse  Citizenship. — But  these  enactments  do 
not  place  National  banks  under  any  disadvantage  with  reference  to 
raising  Federal  questions  in  Federal  courts.     (Walker  v.  Windsor  Na- 
tional Bank,  56  Fed.  Rep.,  76.)    Thus,  a  suit  upon  the  bond  of  the  cashier 
of  a  National  bank  is  a  suit  '*  arising  under  the  laws  of  the  United 
States,"  and  is  therefore  within  the  jurisdiction  of  the  Federal  courts 
regardless  of  the  residence  of  the  parties.     {Id.)     So,  the  United  States 
Circuit  Court  has  jurisdiction  of  a  suit  brought  against  a  director  for 
negligent  performance  of  his  duties;   for,  as  such  suits  rest  upon  the 
requirements  of  the  United   States  laws  and  by-laws  made  pursuant 
thereto,  it  is  a  case  arising  under  the  laws  of  the  United  States.     (Wit- 
ters V.  Foster,  28  Fed.  Rep.,  737.)     And  so,  a  suit  against  the  receiver 
of  a  National  bank  to  compel  him  to  pay  out  of  the  funds  in  his  hands 
as  receiver  moneys  claimed  by  the  complainant  is  a  suit  arising  under 
the  laws  of  the  United  States,  and  can  be  removed  into  the  Federal 
court.    (Hot  Springs  Independent  School  District,  etc.,  v.  First  National 
Bank  of  Hot  Springs,  61  Fed.  Rep.,  417.)     When  a  State  bank  acting 
under  a  statute  of  the  State  calls  in  its  circulation  issued  under  State 
laws,   and  becomes   a  National   bank   under   the   laws   of   the   United 
States,  and  a  judgment  is  recovered  in  a  court  of  a  State  against  the 
National  bank  upon  such  outstanding  circulation,  the  defense  of  the 
State  statute  of  limitations  having  been  set  up,  a  Federal  question 


193 

arises  which  may  give  the  Supreme  Court  of  the  United  States 
jurisdiction  In  error.  (Metropolitan  National  Bank  v.  Claggett,  141  U. 
S.,  520.)  So,  that  court  has  jurisdiction  to  review  a  judgment  in  State 
courts  involving  the  question  whether  a  National  bank  is  exempted 
from  liability  to  account  for  bonds  purchased  by  it  on  condition  of 
selling  back  on  demand.  (Logan  Bank  v.  Townsend,  139  U.  S.,  67.) 
The  Federal  courts  have  jurisdiction  of  an  action  between  a  National 
bank  located  in  one  State  and  a  citizen  of  another  State.  (First  Na- 
tional Bank  v.  Forest,  40  Fed.  Rep.,  705.)  A  Federal  court  is  not  de- 
prived of  jurisdiction  otherwise  vested  in  it  of  a  suit  against  the 
executors  of  an  estate  by  the  fact  that  the  estate  is  in  the  possession  of 
a  State  probate  court  for  purposes  of  administration,  and  the  Federal 
court  has  jurisdiction  to  adjudge  whether  a  liability  exists,  but  can  not 
issue  execution  to  enforce  the  same.  (Wickham  v.  Hull,  60  Fed.  Rep., 
326.) 

Actions  by  and  Against  Receivers. — These  enactments  do  not  afCect 
the  jurisdiction  of  the  Federal  courts  in  cases  of  action  brought  for 
winding  up  the  affairs  of  insolvent  National  banks;  and  the  Receiver 
may  bring  an  action  in  such  courts  to  collect  the  assets  of  the  bank  with- 
out regard  to  the  citizenship  of  the  parties.  (Fisher  v.  Yoder,  53  Fed. 
Rep.,  565;  Linn  County  National  Bank  v.  Crawford,  69  Fed.  Rep.,  532; 
Hendee  v.  Connecticut,  Etc.,  R.  R.  Co.,  26  Fed.  Rep.,  677;  Burnham  v. 
First  National  Bank,  53  Fed.  Rep.,  163.)  Thus,  a  suit  brought  by  the 
Receiver  of  a  National  bank,  by  direction  of  the  Comptroller  of  the 
Currency,  to  enforce  a  liability  due  to  the  bank,  and  to  secure  a  sale 
under  the  order  of  the  court  of  pledged  securities,  constituting  a  con- 
siderable part  of  its  assets,  is  one  for  winding  up  the  affairs  of  the 
bank,  and  within  the  jurisdiction  of  a  Circuit  Court  of  the  United 
States,  without  regard  to  the  citizenship  of  the  parties.  (McCartney  v. 
Earle,  115  Fed.  Rep.,  462.)  So,  the  Receiver  may  be  sued  in  a  Federal 
Court  in  relation  to  a  contract  made  by  him  on  behalf  of  the  estate  in 
the  course  of  its  administration.  (Gilbert  v.  McNulta,  96  Fed.  Rep.,  83.) 
But  the  United  States  Circuit  Court  has  not  jurisdiction  of  a  suit  in  equity 
against  a  receiver  of  a  National  bank  appointed  by  the  Comptroller  of 
the  Currency,  where  the  amount  in  controversy  is  less  than  $2,000. 
(Smithson  v.  Hubbell,  81  Fed.  Rep.,  593.)  And  in  a  suit  by  a  creditor 
of  an  insolvent  National  bank  in  behalf  of  himself  and  all  other  creditors 
to  enjoin  the  receiver  and  the  Comptroller  from  paying  dividends  on  an 
alleged  fraudulent  claim  which  has  been  allowed  by  them,  the  juris- 
dictional amount  is  to  be  determined  solely  by  the  amount  of  complain- 
ant's own  claim,  and  not  by  the  aggregate  of  all  the  claims  of  those 
whom  he  assumes  to  represent,  or  by  the  amount  of  the  dividends,  the 
payment  of  which  is  sought  to  be  enjoined.     (Id.) 

Agent  of  Stockholders. — The  Federal  courts  have  Jurisdiction  of  an 
action  by  or  against  the  agent  of  the  shareholders,  chosen  under  the 


194 

Act  of  June  30,  1876,  regardless  of  the  question  of  citizenship.  (Guar- 
antee  Co.  v.  Han  way,  104  Fed.  Rep.,  369;  Weeks  v.  International  Trust 
Co.,  125  Fed.  Rep.,  371.) 

Jurisdiction  of  State  Coubts.— For  jurisdictional  purposes,  a  Na- 
tional bank  is  a  citizen  of  the  State  in  which  it  is  located.  (Hazen  v. 
Lyndonville  National  Bank,  70  Vt.,  543;  Davis  v.  Cook,  9  Mo.,  134.) 
The  State  courts  have  jurisdiction  of  an  action  brought  by  a  share- 
holder on  behalf  of  himself  and  other  shareholders  to  recover  of  the 
directors  of  an  insolvent  National  bank  damages  for  injuries  resulting 
from  their  negligence  and  misconduct.  (Brinckerhoff  v.  Bostwick,  88 
N.  Y.,  52.)  And  State  courts  have  jurisdiction  of  actions  against  Na- 
tional banks  to  recover  the  penalty  prescribed  by  Congress  for  taking 
usurious  interest.  (Schuyler  v.  Bullong,  28  Neb.,  684;  Henderson  Na- 
tional Bank  v.  Alves,  91  Ky.,  142;  Ordway  v.  Central  National  Bank, 
47  Md.,  217;  Bletz  v.  Columbia  National  Bank,  87  Pa.  St.,  87;  Hade  v. 
McVey,  31  Ohio  St.,  231.)  They  also  have  power  to  issue  a  writ  of 
mandamus  requiring  the  directors  of  a  National  bank  in  liquidation 
to  exhibit  the  books  to  the  stockholders.  (Matter  of  Tuttle  v.  Iron  Na- 
tional Bank,  170  N.  Y.,  9.)  And  where  the  period  of  corporate  existence 
of  a  National  bank  has  expired,  and  its  affairs  are  being  wound  up,  a 
Receiver  for  its  property  may  be  appointed  by  a  State  court  upon  the 
application  of  a  stockholder.  (Cogswell  v.  Second  National  Bank,  56 
Atl.  Rep.,  574.)  But  State  courts  have  no  jurisdiction  in  criminal  cases 
arising  under  the  National-Bank  Act.  {In  re  Eno.  54  Fed.  Rep.,  669; 
Commonwealth  v.  Felton,  101  Mass.,  204;  Commonwealth  v.  Ketner,  92 
Pa.  St.,  372.)  And  a  State  court  has  no  power  to  make  an  order  direct- 
ing the  receiver  of  a  National  bank  who  has  been  appointed  by  the 
Comptroller  of  the  Currency  to  pay  a  judgment  obtained  against  the 
bank  before  the  receiver  was  appointed.  (Ocean  National  Bank  v. 
Carll,  7  Hun.,  237.) 

The  State  statute  of  limitations  applies  to  a  suit  brought  by  the 
receiver  of  a  National  bank  against  a  shareholder  to  recover  an  assess- 
ment upon  his  stock  to  pay  the  debts  of  the  bank.  (Butler  v.  Poole,  44 
Fed.  Rep.,  586.) 

§  182.  Attachment,  etc.,  Before  Final  Judgment  Prohiliited.— 

No  attachment,  injunction,  or  execution  shall  be  issued  against  such 
association  or  its  property  before  final  judgment  in  any  suit,  action 
or  proceeding,  in  any  State,  county,  or  municipal  court.  (Rev. 
Stat.  U.  S.  Sec.  5242.) 

This  section  is  constitutional.  (Dennis  v.  First  National  Bank  of 
Seattle,  127  Cal.,  453.) 


1^5 

Attachments.— In  the  case  of  Pacific  National  Bank  v.  Mixter  (124 
U.  S.,  721)  the  Supreme  Court  of  the  United  States  said  that  although 
this  provision  forbidding  attachments  was  evidently  made  to  secure 
equality  among  the  general  creditors  in  the  division  of  the  proceeds  of 
the  property  of  an  insolvent  bank,  its  operation  is  by  no  means  confined 
to  cases  of  actual  or  contemplated  insolvency;  but  the  remedy  is  taken 
away  altogether,  and  can  not  be  resorted  to  under  any  circumstances. 
The  effect  of  this  provision  is  to  write  into  all  State  attachment  laws 
an  exception  in  favor  of  National  banks,  and  all  such  laws  must  be 
read  as  if  they  contained  an  exception  in  favor  of  National  banks.  And, 
as  all  power  of  issuing  attachments  against  National  banks  has  been 
eliminated  from  State  statutes,  there  can  be  no  laws  of  the  State 
providing  for  such  a  remedy  under  which  the  Circuit  Courts  of  the 
United  States  can  act,  and,  therefore,  these  courts,  as  well  as  the  State 
courts,  have  no  power  to  grant  an  attachment.  (Id.)  As  the  attach- 
ment is  void,  a  bond  given  by  a  National  bank  to  dissolve  such  attach- 
ment, served  by  summons  of  garnishment,  is  also  void.  (Planters'  L. 
&  S.  Bank  v.  Berry,  92  Ga.,  264.)  Nor  is  the  giving  of  such  bond  an 
appearance  in  the  attachment  case  so  as  to  make  valid  a  judgment  en- 
tered on  the  bond  in  that  case  against  the  bank  and  the  sureties  execut- 
ing the  bond.  (Id.)  Sureties  who  have  received  assets  of  the  bank 
to  secure  them  from  loss  thereon,  the  obligation  being  illegal,  will  be 
discharged  in  equity  and  be  compelled  to  transfer  their  collateral  to  the 
receiver  of  the  bank.  (Pacific  National  Bank  v.  Mixter,  124  U.  S.,  721.) 
Where  service  is  made  on  a  National  bank  only  by  attachment  and 
publication  or  service  out  of  the  State,  the  attachment  being  prohibited 
by  this  section  will  be  vacated  and  the  service  set  aside.  (Garner  v. 
Second  National  Bank,  66  Fed.  Rep.,  369.)  And  a  receiver  of  a  National 
bank  situated  in  another  State,  though  not  a  party,  may  move  to  vacate 
an  attachment.  (People's  Bank  of  the  City  of  New  York  v.  Mechanics* 
National  Bank  of  Newark,  62  How.  Pr.,  422.)  The  provision  of  this 
section  prohibiting  attachments  is  not  repealed  by  the  Act  of  Congress 
of  July  12,  1882,  providing  that  the  jurisdiction  for  suits  thereafter 
brought  against  National  banks  shall  be  the  same  as  for  suits  against 
State  banks,  and  repealing  laws  inconsistent  therewith.  (Raynor  v.  Pacific 
National  Bank,  93  N.  Y.,  371.)  The  prohibition  applies  whether  the  bank 
is  solvent  or  insolvent.  (Van  Reed  v.  People's  National  Bank,  173  N.  Y., 
314.)  But  it  does  not  apply  where  the  bank  intervenes  in  an  attach- 
ment suit  and  claims  the  property.  (Willard  Mfg.  Co.  v.  Tierney,  130 
N.  C,  611.)  And  an  attachment  sued  out  against  a  National  bank 
as  garnishee  is  not  an  attachment  against  the  bank  or  its  property 
within  the  meaning  of  this  Section.  (Earle  v.  Pennsylvania,  178  U.  S., 
449.)  The  right  acquired  by  such  an  attachment  is  not  lost  to  the  at- 
taching creditor  by  the  suspension  of  the  bank  and  the  appointment  of 
a  receiver.  (Id.)  But  the  distribution  of  the  bank's  assets  in  the 
hands  of  the  receiver  cannot  be  in  any  wise  directly  controlled  by  the 


196 

State  court  issuing  tLe  attachment,  or  seized  under  an  attachment  or 
execution  in  the  hands  of  any  State  officer.  (Id.)  The  receiver  may  be 
notified  by  service  upon  him  of  an  attachment  issued  from  a  State 
court  of  the  nature  and  extent  of  the  interest  asserted  or  sought  to 
be  acquired  by  the  plaintiff  in  the  attachment  in  the  assets  in  his 
custody.  (Earle  v.  Conway,  178  U.  S.,  456.)  But  such  an  attachment 
cannot  create  any  lien  upon  specific  assets  of  the  bank  in  the  hands  of 
the  Receiver  nor  disturb  his  custody  of  those  assets,  nor  prevent  him 
from  paying  to  the  Treasurer  of  the  United  States,  subject  to  the  order 
of  the  Comptroller  of  the  Currency,  all  moneys  coming  to  his  hands  or 
realized  by  him  as  Receiver  from  the  sale  of  the  property  and  assets  of 
the  bank.     (Id.) 

Injunctions. — This  section  forbids  State  courts  to  grant  injunctions 
against  National  banks  before  final  judgment;  and  the  prohibition  is  not 
repealed  by  Stat.  U.  S.  1882,  C.  290,  Sec.  4,  or  Stat.  U.  S.  1887,  C.  373,  Sec. 
4,  or  Stat.  U.  S.  1888,  C.  866,  Sec.  4.  (Freeman  Manufacturing  Com- 
pany V.  National  Bank  of  the  Republic,  160  Mass.,  398.)  But  this  sec- 
tion does  not  deprive  the  Federal  courts  of  the  power  to  issue  such  an 
injunction.  (Hoover  v.  Weiss  Malting  and  Elevator  Co.,  55  Fed.  Rep., 
356.)  And  where  the  case  is  removed  into  the  Federal  court  after  an 
injunction  granted  by  the  State  court,  the  Federal  court  may  continue 
such  injunction.  (Id.)  When  a  valid  judgment  has  been  obtained  in  a 
State  court  against  a  National  bank,  and  the  lien  thereof  has  attached 
to  its  property,  before  the  appointment  of  a  Receiver,  this  section  ap- 
plies to  prohibit  the  issue  of  an  injunction  by  a  Federal  court,  at  the 
suit  of  the  Receiver,  to  restrain  the  enforcement  of  such  judgment. 
(Baker  v.  Ault,  78  Fed  Rep.,  374.) 

§  183.  Proceeding's  to  Enjoin  Comptroller — Where  Ead. — All 
proceedings  by  any  National  banking  association  to  enjoin  the 
Comptroller  of  the  Currency,  under  the  provisions  of  any  law  re- 
lating to  National  banking  associations,  shall  be  had  in  the  district 
where  such  association  is  located.     (Eev.  Stat.  U.  S.  Sec.  736.) 

§  184.  United  States  District  Attorney  to  Conduct  Snits.— All 
suits  and  proceedings  arising  out  of  the  provisions  of  law  govern- 
ing National  banking  associations,  in  which  the  United  States  or 
any  of  its  officers  or  agents  shall  be  parties,  shall  be  conducted  by 
the  district  attorneys  of  the  several  districts  under  the  direction  and 
supervision  of  the  Solicitor  of  the  Treasury.  (Eev.  Stat.  U.  S. 
Sec.  380.) 


197 

A  commission  from  the  Department  of  Justice  to  an  attorney  ap- 
pointing him  a  special  assistant  to  a  district  attorney  is  not  to  be  con- 
strued with  technical  nicety,  and  such  a  commission  appointing  an  at- 
torney as  special  assistant  to  a  district  attorney,  to  assist  "  in  the  pre- 
paration and  trial "  of  cases  of  the  United  States  against  the  officers  of 
an  insolvent  National  bank  against  some  of  whom  indictments  had 
previously  been  returned,  is  to  be  construed  as  having  been  given 
under  Rev.  St.,  Sec.  363,  U.  S.  Com.  St.,  1901,  p.  208,  and  to  authorize 
the  person  so  commissioned  to  assist  in  the  performance  of  any  duties 
of  the  district  attorney,  including  appearing  before  the  grand  jury  to 
present  evidence  for  new  indictments.  (United  States  v.  Twining, 
132  Fed.  Rep.,  129.) 

The  fact  that  such  commission  is  signed  by  the  Solicitor  General 
In  the  Department  of  Justice  as  "  Acting  Attorney  General "  does  not 
affect  the  validity  of  the  appointment.  (Id.)  Nor  does  the  fact  that 
the  person  appointed  as  a  special  assistant  to  a  district  attorney  in  the 
prosecution  of  criminal  actions  against  the  officers  of  an  insolvent 
National  bank  had  previously  been  employed  by  the  receiver  of  such 
bank  to  prosecute  civil  suits  against  such  officers.    (Id.) 

§  185.  Instruments   Certified   by   Comptroller   as   Evidence. — 

Every  certificate,  assignment,  and  conveyance  executed  by  the 
Comptroller  of  the  Currency,  in  pursuance  of  law,  and  sealed  with 
his  seal  of  office,  shall  be  received  in  evidence  in  all  places  and 
courts;  and  all  copies  of  papers  in  his  office,  certified  by  him  and 
authenticated  by  the  said  seal,  shall  in  all  cases  be  evidence  equally 
with  the  originals.  An  impression  of  such  seal  directly  on  the  paper 
shall  be  as  valid  as  if  made  on  wax  or  wafer.  (Kev.  Stat.  U.  S. 
Sec.  884.) 

Certified  copies  of  papers  are  usually  furnished  by  the  Comptroller's 
office  upon  affidavit  setting  forth  what  they  are  required  for,  and  that 
the  evidence  can  be  procured  in  no  other  way,  provided  the  parties  re- 
questing are  entitled  to  receive  them,  and  if  the  giving  of  the  copies 
would  not  be  detrimental  to  the  public  service. 

§  186.  Certified  Copy  of  Organization  Certificate  as  Evidence. 

— Copies  of  the  organization  certificate  of  any  National  banking  as- 
sociation, duly  certified  by  the  Comptroller  of  the  Currency,  and 
authenticated  by  his  seal  of  office,  shall  be  evidence  in  all  courts  and 
places  within  the  jurisdiction  of  the  United  States  of  the  existence 
of  the  association,  and  of  every  matter  which  could  be  proved  by 


19^ 

the  production  of  the  original  certificate.     (Eev.  Stat.  XJ.  S.  Sec. 
885.) 

Effect  of  Certificate  as  Evidence. — This  certificate,  together  with 
proof  that  the  bank  has  been  acting  as  a  National  bank  for  a  long  time, 
is  amply  suflScient  evidence  to  establish,  at  least  prima  facie,  the  exist- 
ence of  the  corporation.  (Mix  v.  National  Bank  of  Bloomington,  91  111., 
20.)  See  also  Thatcher  v.  West  River  National  Bank,  19  Mich.,  196; 
Merchants'  National  Bank  v.  Glendon,  120  Mass.,  97.)  And  such  certifi- 
cate is  competent  evidence  in  a  State  court.  (Tapley  v.  Martin,  116 
Mass.,  275.)  In  a  suit  against  the  bank  or  its  stockholders  this  cer- 
tificate is  conclusive  evidence  of  the  organization.  (Casey  v.  Galll,  94 
U.  S.,  673.) 

Certificate  of  Deputy  Compteolleb. — ^Where  the  certificate  is  signed 
by  the  Deputy  Comptroller,  the  court  will  assume  that  at  the  date  of 
such  certificate  he  was  authorized  to  exercise  the  power  and  discharge 
the  duties  of  Comptroller.  (Keyser  v.  Hitz,  133  U.  S.,  438.)  And  it  is 
no  objection  that  it  is  signed  by  him  as  Acting  Comptroller.  (Id.) 
(Aspinwall  v.  Butler,  133  U.  S.,  595.) 

Proof  by  Other  Evidence. — In  an  action  by  a  National  bank  it  is 
competent  to  prove  by  parol  that  it  was  carrying  on  a  general  banking 
business'  as  a  National  bank  authorized  by  the  general  laws  of  the 
United  States  under  the  name  by  which  it  had  sued.  (Yakima  National 
Bank  v.  Knipe,  6  Wash.,  348.) 


PART    SECOND. 

MONOGEAPHS  ON  NATIONAL  BANK  SUBJECTS. 

Methods  of  Organizing  and  Form  of  By-Laws. 

Management  of  National  Banks. 

Liquidation  and  Consolidation. 

Extension  of  Charter. 

Reorganization  Versus  Extension. 

National  Banks  as  Government  Depositaries. 

METHODS  OF  ORGANIZING. 

In  organizing  a  National  bank  one  of  three  methods  may  be  pur- 
sued, according  to  existing  conditions : 

1.  De  Novo — creating  a  new  bank. 

2.  Reorganization  of  State  or  private  bank  or  co-partnership. 

3.  Conversion  of  an  incorporated  State  bank. 

ORGANIZATION  DE  NOVO. 

Section  5133  TJ.  S.  R.  S.  provides  that  any  number  of  natural 
persons,  not  less  in  any  case  than  five,  may  organize  a  National  bank. 

Corporators  Must  Be  Natural  Persons. — ^The  corporators  must 
be  natural  persons  (Section  5133,  Revised  Statutes) — that  is, 
human  beings,  as  distinguished  from  artificial  beings  which 
exist  only  in  contemplation  of  law,  such  as  corporations  and  joint- 
stock  companies.  The  reason  for  excluding  these  merely  legal  enti- 
ties is  obvious.  Such  powers  as  they  have  are  limited,  and  in 
most  cases  they  are  not  authorized  to  become  corporators  of  an- 
other artificial  being,  and  their  participation  in  the  organization 
might  give  rise  to  questions  affecting  its  validity.  Partnerships, 
equally  with  corporations  are  excluded  under  the  terms  of  the 
statute  as  corporators,  but  may  be  stockholders  of  a  bank  if  not  pro- 
hibited by  the  laws  of  the  State  in  which  the  bank  is  located. 
15  201 


202 

Married  Women  as  Corporators. — Whether  a  married  woman 
can  be  a  corporator  will  depend  upon  the  law  of  the  State  in 
which  she  resides  and  where  the  bank  is  to  be  located.  If  by 
the  State  law  she  is  authorized  to  make  a  contract,  and  has  the 
capacity  to  bind  herself  to  all  the  liabilities  and  obligations  of  a 
shareholder,  there  is  no  reason  why  she  should  not  participate  in 
forming  the  corporation. 

Infant  Can  Not  Be  Corporator. — An  infant — ^that  is,  a  person 
under  legal  age — should  never  be  allowed  to  become  a  corporator, 
for  his  contract  would  not  be  binding  and  he  could  repudiate  it 
upon  becoming  of  age. 

Corporators  May  Act  by  Agent  or  Attorney. — There  seems  to 
be  no  reason  why  a  corporator  may  not  execute  the  papers  by  an 
agent  or  attorney.  In  the  case  of  the  organization  of  a  railroad 
corporation,  it  was  said  by  the  Court  of  Appeals  of  New  York, 
that  the  instrument  of  incorporation  might  be  executed  by  a  duly 
authorized  agent.  (Matter  of  N.  Y.,  L.  E.  and  W.  E.  R.  Co., 
99  N.  Y.,  12.)  There  is  nothing  in  the  National  banking  law 
to  require  a  different  rule  in  the  organization  of  a  National  bank. 
As  was  said  in  the  case  referred  to,  "  the  statute  does  not  forbid  it ; 
the  ordinary  rules  of  law  justify,  rather  than  condemn  it."  The 
power  of  attorney  need  not,  of  course,  be  in  any  special  form,  but 
it  should  clearly  state  that  the  person  giving  it  authorizes  the  per- 
son to  whom  it  is  given  to  execute  in  his  name  the  articles  of  as- 
sociation and  organization  certificate  and  any  other  necessary 
papers  and  to  take  shares  for  him  in  the  proposed  association. 
It  should  be  acknowledged  in  the  same  way  as  the  organization  cer- 
tificate, and  should  be  filed  in  the  ofiice  of  the  Comptroller  of  the 
Currency  together  with  the  other  papers. 

The  following  is  a  form  of  power  of  attorney  that  may  be  used : 

Know  all  men  by  these  presents  that  I ,  of ,  do 

hereby  appoint ,  of ,  my  attorney,  for  me  and  in  my 

name  to  sign  and  execute  all  papers  and  instruments  that  it  shall  be 
proper  and  necessary  for  the  corporators  of  the  National  banking  asso- 
ciation to  be  located  in  the of ,  county  of ,  State  of 

.  and  to  be  known  as  the  ,  and  to  subscribe  for  ■ 


203 

Ehares  in  the  original  capital  stock  of  the  said ;  hereby  ratifying 

and  confirming  all  that  my  said  attorney  shall  lawfully  do  by  virtue 
hereof. 

In  witness  whereof  I  have  hereunto  set  my  hand  this •  day  of 

,  19 — ,  [Signature.] 

State  of , 


County  of 


:    }  *»• 


On  this  —  day  of  — ,  19 — ,  before  me,  a  notary  public  in  and  for  the 

State  and  county  aforesaid,  appeared  ,  known  to  me  to  be  the 

person  who  executed  the  foregoing  instrument,  and  acknowledged  that 
he  executed  the  same.  [Signature  of  notary.]    ^ 

[Seal  of  notary.] 

Tlie  Subscription  Paper. — The  law  does  not  require  a  prelim- 
inary subscription  for  the  stock  of  the  proposed  bank,  though  such 
subscription  is  advisable,  and  is  frequently  the  means  of  greatly 
facilitating  the  organization.  By  it  the  persons  are  brought  to- 
gether in  a  mutual  contract,  and  are  thus  enabled  to  come  to  a 
full  understanding  on  matters  preliminary  to  the  organization  of 
the  bank,  about  which  there  may  be  great  difference  of  opinion. 
To  postpone  doing  so  nntil  the  articles  of  association  are  pre- 
sented for  signature  to  the  various  persons  who  are  to  become  cor- 
porators might  cause  confusion  and  delay.  For  example,  it  is 
well  to  have  an  understanding  as  to  what  provisions  the  articles  of 
association  shall  contain;  who  shall  be  named  as  the  first  directors 
of  the  bank;  where  the  banking  house  shall  be  located;  the  exact 
number  of  shares  each  person  interested  is  to  have,  and  it  fre- 
quently happens  that  persons  are  willing  to  become  shareholders 
only  upon  prescribed  conditions;  that  a  certain  man  shall  be 
president;  that  the  banking  house  shall  be  located  on  a  certain 
street,  etc. ;  so  it  will  be  seen  that  the  chances  of  misunderstandings 
and  future  disagreements  are  very  materially  lessened  if  the  con- 
ditions are  plainly  set  fori;h  in  a  subscription  paper. 

The  signing  of  the  subscription  paper  does  not  necessarily  con- 
stitute one  a  member  of  the  corporation  which  is  afterwards 
formed;  and  should  the  other  subscribers  refuse  to  admit  him  to 
participation  in  the  organization,  he  would  have  only  an  action 
for  damages.  But  when  requested  to  do  so  by  those  promoting  the 
organization,  each  subscriber  would  be  bound  to  join  in  the  execu- 
tion of  all  the  instruments  necessary  that  the  corporators  should 


204 

execute  for  the  formation  of  the  corporation.  Should  any  sub- 
scriber refuse  to  execute  these  instruments,  and  his  refusal  have 
the  effect  of  preventing  an  organization,  or  greatly  delay  it,  a 
court  of  competent  jurisdiction  might,  upon  petition  of  the  other 
subscribers,  decree  specific  performance.  (See  Londley  on  Part- 
nership, p.  925,  and  cases  there  cited.) 

FoBM  OF  Subscription  Paper. 

We  whose  names  are  hereunto  signed  do  hereby  subscribe.  In  tho 
proportions  hereinafter  set  opposite  our  respective  names,  for  the  stock 
of  a  National  banking  association  to  be  organized  under  the  laws  of  the 

United  States  with  a  capital  stock  of thousand  dollars,  divided 

into  shares,  of  the  par  value  of  one  hundred  dollars  each,  the 

Baid  National  banking  association  to  be  located  in  the  —  of  — , 
State  of ,  and  to  be  called  "  The ." 


Signatures.  jj  Shares. 


Capital  Bequired. — The  capital  required  is  according  to  the 
population  of  the  place,  as  follows: 

I  25,000  where  the  population  does  not  exceed    3,000 

50,000  «  "  -  U  U  U  gQQQ 

100,000       "        "  -  m       m         u        50,000 

200,000       ««        «  •  exceeds....*,...  50,000 

Entite  Stock  May  Be  Taken  by  a  Few  Persons  and  After- 
wards Distributed. — ^When  a  considerable  number  are  to  be- 
come stockholders,  and  it  is  not  definitely  known  how  many  shares 
will  be  taken  by  each,  it  may  expedite  the  case  to  have  a  few  (say 
the  incorporators)  listed  in  the  organization  certificate  as  the 
owners  of  the  entire  stock,  but  in  order  that  the  stock  ledger  may 
show  the  orginal  holdings  of  stock  the  original  stock  certificates 
should  be  issued  in  the  names  of  those  listed,  the  certificates  to  be 
ultimately  surrendered  for  reissue  and  assignment,  in  accordance 
with  the  agreement  which  may  have  been  entered  into  in  antici- 
pation of  the  organization  of  the  bank. 


205 


Temporary  Stock  Certificates. — The  payment  of  the  first  and 
subsequent  installments  on  stock  should  be  credited  on  the  tem- 
porary stock  certificates,  the  latter  to  be  surrendered  in  exchange 
for  permanent  certificates  when  the  final  installment  is  paid. 

The  following  form  of  temporary  certificate  is  in  general  use : 


No. 


Temporaby  Ceetificate. 


Shares. 


The 


National  Bank  of 


This  is  to  certify  that is  entitled  to 

stock  of  the  National  Bank  of  


shares  of  the  capital 

-,  capital    $ ,  and  that 

upon  payment  of  all  installments,  amounting  to  $ ,  and  surrender 

of  this  temporary  certificate,  a  certificate  of  stock  will  be  issued. 

Witness  the  seal  and  the  signatures  of  the  president  and  cashier  of 
the  bank. 

Dated ,  190—. 

The —  National  Bank  of . 

By ,  , 


Cashier. 


President. 


First  installment. 

Second 

Third 

Fourth 

Fifth 

Sixth 


Payments  on  Account  of  Capital. 
per  cent.,  amounting  to  $ ,  paid 


M 


•C 
M 


M 


190—. 
190—. 
190—. 
190—. 
190—. 
190—. 


Assignment. 

)  For' value  received   I   hereby   transfer  and   assign   to 
temporary  certificate,  and  hereby  appoint  and  constitute  - 


this 


my  true  and   lawful   attorney  to   transfer   said   certificate,   with   full 
I)Ower  of  substitution  in  the  premises. 

Dated  at ,  this day  of ,  190 — . 

Witness: .  . 


Application  to  the  Comptroller  for  Title. — When  the  promoters 
have  fixed  upon  a  name  for  the  bank,  the  Comptroller  should  be 
notified,  his  approval  of  title  selected  being  necessary.  If  capital 
is  to  be  less  than  $100,000,  the  approval  of  the  Secretary  of  the 
Treasury  is   also   required.     (Sec.    5138   K.    S.) 

The  notice  should  read  as  follows: 


206 

Sib:  Notice  is  hereby  given  that  we,  the  undersigned,  being  natural 
persons  and  of  lawful  age,  intend,  with  others,  to  organize  a  National 

banking  association,  under  the  title  of  "The ,"  to  be  located  at 

,  county  of ,  State  of ,  with  a  capital  of  $ . 

In  order  that  we  may  effect  such  organization,  we  request  that  proper 

blank  forms  be  sent  to ,  at ,  and,  if  the  title  selected  shall 

be  approved,  that  it  be  reserved  for  us  for  the  period  of  sixty  days. 

This  application  must  be  signed  by  at  least  five  of  the  persons 
who  are  to  participate  in  the  organization,  each  applicant  stating 
his  residence,  business  and,  in  figures,  his  financial  strength. 

The  Form  of  Title. — The  name  of  the  place  in  which  the  bank  is 
to  be  located  must  constitute  a  part  of  the  title.  For  example, 
"  The  Exchange  National  Bank  of  Omaha.^'  If  the  name  of  the 
place  is  selected  as  the  distinguishing  part  of  the  title,  it  must  not 
also  be  added.  Thus,  if  the  title  is  to  be,  "  The  Omaha  National 
Bank,"  the  words  "  of  Omaha  "  must  not  be  added,  as  they  would 
be  superfluous.  The  addition  of  the  name  of  the  State  is  not  al- 
lowed. It  is  best  to  make  the  title  brief,  not  using  unnecessary 
words,  nor  a  long  name  or  compound  word  as  the  distinguishing 
part.  E.  g,,  "The  National  Susquehanna-Kiver  Bank,  of  the 
City  of  Harrisburg"  would  be  very  cumbersome. 

The  title  "The  First  National  Bank  of  ''  will  not  be 

igranted  in  case  another  National  bank  has  ever  been  organized  at 
the  place  in  question,  whether  still  in  existence  or  not,  and  the 
Comptroller  will  not  grant  the  title  of  Second  National  Bank 
where  such  title  would  be  a  misnomer  on  account  of  the  exis- 
tence of  two  or  more  National  banks  in  the  place.  Nor  will  he 
grant  a  title  liable  to  be  confounded  with  that  of  another  National 
or  State  bank. 

Standing  of  Parties  Must  Be  Vonclied  For. — The  Comptroller 
requires  that  the  public  ofiBcial  endorsing  the  applicants  shall  be 
sufficiently  acquainted  with  them  to  be  able  to  certify  that  he 
believes  their  statement  correct,  and  that  they  are  acting  in  good 
faith,  and  unless  the  applicants  are  reasonably  well  rated  in  Mer- 
cantile Agency  reports  further  evidence  of  their  good  financial 
standing  should  be  furnished. 


207 

Practice  of  Comptroller  to  Eeserve  Title. — It  is  the  practice  of 
the  Comptroller,  when  an  application,  satisfactorily  endorsed,  is 
received,  to  reserve  for  the  parties,  for  a  reasonable  time,  the  title 
selected.  The  time  allowed  is  sixty  days,  but  extension  is  some- 
times granted  under  certain  circumstances. 

Organization  Papers. — When  the  title  selected  has  been  ap- 
proved by  the  Comptroller,  he  forwards  to  the  applicants  blank 
organization  papers,  with  specific  instructions  for  their  execution. 
Written  forms  will  be  accepted  only  in  exceptional  cases,  a 
great  amount  of  labor  is  involved  in  examining  papers  thus  pre- 
pared, which  is  avoided  by  the  use  of  printed  forms. 

The  organization  blanks  are  as  follows: 

Articles  of  Association. 

Organization  Certificate. 

Oaths  of  Directors. 

Certificate  as  to  Payment  on.  Capital  Stock. 

Order  for  Circulation. 

Signatures  of  Officers. 

In  the  case  of  reorganization  a  Certificate  of  Directors  in  re- 
gard to  assets  purchased  from  the  old  bank  is  required,  and  if  a 
conversion  of  a  State  bank,  there  is  an  additional  form  for  share- 
holders to  authorize  conversion. 

The  execution  of  these  papers  is  a  very  simple  matter,  but 
mistakes  are  very  frequently  made  through  carelessness.  For 
example:  the  Corporate  Title  is  not  inserted  exactly  as  approved 
by  the  Comptroller,  perhaps  abbreviated  or  name  of  State  added; 
names  of  persons  misspelled;  errors  made  in  jurat;  oaths  of  di- 
rectors antedating  organization  certificate,  etc.  Care  should  be 
taken  to  prepare  the  papers  correctly,  so  as  to  avoid  the  delay  inci- 
dent to  their  return  by  the  Comptroller  for  correction. 

Articles  of  Association. — This  is  the  first  instrument  to  be  exe- 
cuted. Sec.  5133  Revised  Statutes  provides  that  the  Articles  "  shall 
specify  in  general  terms  the  object  for  which  the  association  is 
formed,  and  may  contain  any  other  provisions  not  inconsistent 
with  law  which  the  association  may  see  fit  to  adopt  for  the  regula- 
tion of  its  business  and  conduct  of  its  affairs.'* 


208 
The  following  is  the  form  furnished  by  the  Comptroller: 

Abticles  of  Association. 

For  the  purpose  of  organizing  an  association  to  carry  on  the  business 
of  banking,  under  the  laws  of  the  United  States,  the  undersigned  sub- 
scribers for  the  stock  of  the  association  hereinafter  named  do  enter 
into  the  following  articles  of  association: 

First.    The  name  and  title  of  this  association  shall  be  "  The .** 

Second.  The  place  where  its  banking  house  or  office  shall  be  located 
and  its  operations  of  discount  and  deposit  carried  on  and  its  general 
business  conducted  shall  be . 

Third.    The  board  of  directors  shall  consist  of shareholders. 

The  first  meeting  of  the  shareholders  for  the  election  of  directors  shall 

be  held  at ,  on  the ,  or  at  such  other  place  and  time  as  a 

majority  of  the  undersigned  shareholders  may  direct 

Fourth.  The  regular  annual  meetings  of  the  shareholders  for  the 
election  of  directors  shall  be  heW  at  the  banking  house  of  this  associar 
tion  on  the  second  Tuesday  of  January  of  each  year;  but  if  no  election 
shall  be  held  on  that  day  it  may  be  held  on  any  other  day,  according  to 
the  provisions  of  section  5149  of  the  Revised  Statutes  of  the  United 
States;  and  all  elections  shall  be  held  according  to  such  regulations  as 
may  be  prescribed  by  the  board  of  directors,  and  not  inconsistent  with 
the  provisions  of  the  National  banking  law  and  of  these  articles. 

Fifth.    The  capital  stock  of  this  association  shall  be thousand 

dollars,  to  be  divided  into  shares  of  one  hundred  dollars  each;  but  the 
capital  may,  with  the  approval  of  the  Comptroller  of  the  Currency,  be 
increased  at  any  time  by  shareholders  owning  two-thirds  of  the  stock, 
according  to  the  provisions  of  an  act  of  Congress  approved  May  1,  1886; 
and  in  case  of  the  increase  of  the  capital  of  the  association,  each  share- 
holder shall  have  the  privilege  of  subscribing  for  such  number  of  shares 
of  the  proposed  increase  of  the  capital  stock  as  he  may  be  entitled  to 
according  to  the  number  of  shares  owned  by  him  before  the  stock  is 
increased. 

Sixth.  The  board  of  directors,  a  majority  of  whom  shall  be  a  quorum 
to  do  business,  shall  elect  one  of  its  members  president  of  this  associa- 
tion, who  shall  hold  his  office  (unless  he  shall  be  disqualified,  or  be 
sooner  removed  by  a  two-thirds  vote  of  all  the  members  of  the  board), 
for  the  term  for  which  he  was  elected  a  director;  the  directors  shall 
have  power  to  elect  a  vice-president,  who  shall  also  be  a  member  of  the 
board  of  directors,  and  who  shall  be  authorized,  in  the  absence  or  in- 
ability of  the  president  from  any  cause  to  perform  all  acts  and  duties 
pertaining  to  the  office  of  president  except  such  as  the  president  only 
is  authorized  by  law  to  perform;  and  to  elect  or  appoint  a  cashier  and 


209 

such  other  officers  and  clerks  as  may  be  required  to  transact  the  busi- 
ness of  the  association,  to  fix  the  salaries  to  be  paid  to  them,  and  con- 
tinue them  in  office,  or  to  dismiss  them,  as  in  the  opinion  of  a  majority 
of  the  board  the  Interests  of  the  association  may  demand. 

The  directors  shall  have  power  to  define  the  duties  of  the  officers  and 
clerks  of  the  association,  to  require  bonds  from  them  and  to  fix  the 
penalty  thereof;  to  regulate  the  manner  in  which  elections  of  directors 
shall  be  held,  and  to  appoint  judges  of  the  election;  to  make  all  by- 
laws that  it  may  be  proper  for  them  to  make,  not  inconsistent  with  law, 
for  the  general  regulation  of  the  business  of  the  association  and  the 
management  of  its  affairs;  and,  generally,  to  do  and  perform  all  acts 
that  it  may  be  legal  for  a  board  of  directors  to  do  and  perform,  under 
the  Revised  Statutes  aforesaid. 

Seventh.  This  association  shall  continue  for  the  period  of  twenty 
years  from  the  date  of  the  execution  of  its  organization  certificate, 
unless  sooner  placed  in  voluntary  liquidation  by  the  act  of  its  share- 
holders owning  at  least  two-thirds  of  its  stock,  or  otherwise  dissolved 
by  authority  of  law. 

Eighth.  These  articles  of  association  may  be  changed  or  amended  at 
any  time  by  shareholders  owning  a  majority  of  the  stock  of  the  associa- 
tion in  any  manner  not  inconsistent  with  law;  and  the  board  of 
directors,  or  any  three  shareholders,  may  call  a  meeting  of  the  share- 
holders for  this  or  any  other  purpose,  not  Inconsistent  with  law,  by  pub- 
lishing notice  thereof  for  thirty  days  in  a  newspaper  published  in  the 
town,  city,  or  county  where  the  bank  is  located,  or  by  mailing  to  each 
shareholder  notice  in  writing  thirty  days  before  the  time  fixed  for  the 
meeting. 

In  witness  whereof  we  have  hereunto  set  our  hands  this day 

of ,  nineteen  hundred  and . 

[Signatures  of  corporators, 

and  there  must  be  at  least  flve.3 
It  formerly  was  required  that  the  President  or  Cashier  certify  that  the 
Articles  of  Association  had  been  executed  in  duplicate.  The  Comptroller 
of  the  Currency  now  rules  that  the  execution  of  the  Organization  Certifi- 
cate by  the  parties  executing  the  Articles  of  Association  (as  is  required) 
and  the  acknowledgment  of  the  same  is  sufficient. 

This  form,  of  course,  may  be  varied  to  meet  the  views  of  the 
corporators,  and  any  provisions  may  be  inserted  which  are  not  in- 
consistent with  the  National  banking  laws,  but,  unless  conditions 
specially  require,  it  is  advisable  to  conform  to  this  form  provided 
by  the  Comptroller  of  the  Currency. 


210 

Signing  of  Articles. — It  is  unnecessary  for  more  than  five  of 
the  subscribers  to  the  capital  stock  to  act  as  incorporators  and 
sign  the  articles  of  association 

How  Corporators  Should  Sign. — In  executing  the  organization 
papers,  each  person  should  sign  his  Christian  name  and  surname 
in  full,  as  is  usually  done  in  the  execution  of  deeds  and  other  legal 
instruments. 

Should  Be  Executed  in  Duplicate. — ^The  law  requires  that  a  copy 
of  the  articles  of  association  shall  be  filed  in  the  office  of  the 
Comptroller  of  the  Currency.  It  often  happens  that  the  original 
articles  in  the  possession  of  the  bank  are  lost  or  destroyed.  For 
this  reason  it  has  become  the  practice  to  execute  them  in  duplicate, 
and  to  file  with  the  Comptroller  one  of  these  instead  of  a  copy. 

Sliding  Scale  of  Directors. — It  is  well  to  have  article  three  read, 

*'  The  board  shall  consist  of  not  less  than  five  nor  more  than 

(fix  limit)  shareholders,''  then  the  number  can  be  changed  within 
that  limit  at  any  annual  meeting  without  amending  the  articles. 
The  number  elected  constitutes  the  board  for  the  year,  but  should 
the  bank's  interests  specially  require  an  increase  in  directors  dur- 
ing the  year,  the  Comptroller  may  give  his  consent.  Then  it  will 
be  necessary,  at  a  meeting  of  the  shareholders  called  for  the  pur- 
pose and  by  a  majority  vote,  to  amend  article  three  to  read :  "  The 
board  of  directors  shall  consist  of  (number  desired)  share- 
holders," or  the  amendment  may  be  an  increase  in  the  limit  of 
the  sliding  scale.  The  shareholders  (not  the  directors)  may  then 
elect  the  additional  directors  provided  for,  and  the  Comptroller 
consent  to  the  change  in  number  for  the  year. 

Naming  Directors  in  Articles. — Instead  of  providing,  as  in  the 
form  given  (Article  3),  for  a  meeting  of  shareholders  to  elect 
directors,  the  incorporators  may  designate,  if  they  choose,  in  the 
articles  the  persons  who  shall  constitute  the  first  board  of  directors. 
In  this  event  the  third  article  in  the  preceding  form  should  be 
made  to  read  as  follows: 


211 

The  board  of  directors  shall  consist  of stockholders,  and  the 

following  persons  [here  insert  names]  have  been  duly  elected  directors 
of  this  association,  to  hold  their  offices  as  such  until  the  regular  annual 
election  takes  place,  pursuant  to  the  fourth  article  of  these  articles  of 
association,  and  until  their  successors  are  chosen  and  have  qualified. 

ftnalification  of  Directors. — Section  5146,  K.  S.,  provides  that 
a  director  of  a  National  bank  must  be  a  citizen  of  the  United 
States,  and  at  least  three-fourths  of  the  Board  must  have  resided 
in  the  State  or  Territory  where  the  bank  is  located  for  the  year 
just  preceding  their  election,  and  must  be  resident  therein  while 
directors;  every  director  also  must  own  in  his  own  right  and  free 
from  pledge  at  least  ten  shares  of  the  capital  stock  of  the  bank. 
This  amount  of  the  proposed  stock  it  is  necessary  to  pay  for  only 
as  the  regular  payments  on  the  stock  of  the  bank  are  required  by 
law. 

Election  of  Directors. — Section  5145,  K.  S.,  provides  that  a 
National  bank  shall  have  at  least  five  directors,  who  shall  be  elected 
at  a  shareholders'  meeting,  to  be  held  before  the  bank  is  chartered, 
and  afterwards  at  annual  meetings  in  January.  The  usual  date  is 
the  second  Tuesday  of  January,  but  this  is  not  obligatory.  Not- 
withstanding the  provision  for  such  election,  the  Comptroller's 
Office  has  always  construed  Sec.  5147,  R.  S.,  as  authorizing  the 
first  board  of  directors  to  be  appointed  or  elected.  In  either  case 
it  is  necessary  that  the  directors  be  appointed  or  elected  at  the 
same  time  or  immediately  after  the  execution  of  the  organization 
papers  that  they  may  elect  the  officers  of  the  bank,  to  meet  the 
Comptroller's  requirement  that  the  president  or  cashier  certify  to 
the  execution  of  the  articles  of  association.  It  is  required  that 
the  annual  election  be  held  in  January,  even  though  a  bank  is 
organized  and  directors  elected  only  shortly  before  that  time,  and 
though  no  change  in  the  Directory  may  be  desired.  A  full  meeting 
is  not  necessary,  as  the  number  of  shareholders  present  or  repre- 
sented is  not  material  for  a  legal  election. 

Number  of  Directors. — In  fixing  the  number  of  directors,  it  is 
well,  as  before  stated,  to  adopt  a  sliding  scale  in  articles  of  associa- 
tion, to  avoid  the  necessity  of  calling  a  meeting  of  stockholders  to 


212 

change  the  articles,  in  case  it  is  deemed  expedient  at  the  annual 
meeting  to  increase  or  decrease  the  number.  The  form  is  given  on 
a  preceding  page.  We  would  suggest  a  board  of  at  least  seven 
members — as  the  law  requires  that  the  reports  of  condition,  made 
five  times  during  the  year,  shall  be  attested  by  not  less  than  three 
directors;  so  that  with  a  smaller  board  it  will  be  seen  that  the 
liberty  of  the  members  to  be  absent  from  the  place  is  curtailed. 

Oath  of  Directors. — The  oaths  of  directors  required  by  Sec.  5147, 
R.  S.,  may  be  taken  singly  or  jointly  as  is  most  convenient;  gen- 
erally they  are  taken  at  the  meeting  to  organize  the  board.  They 
must  not  antedate  the  execution  of  the  articles  and  organization 
certificate. 

The  oath  should  be  administered  by  an  officer  having  an  official 
eeal,  and  promptly  sent  to  the  Comptroller. 

Blank  forms  for  directors'  oaths  are  furnished  by  the  Comp- 
troller of  the  Currency,  but  written  oaths  if  in  legal  form  may  be 
accepted. 

FoBM  FOB  Joi\T  Oath  of  Dibectobs. 

State  of , 


1 


County  of  '  *** 

We,  the  undersigned^  directors  of  the ^  of ,  in  the  State 

of ,  beting  citizens  of  the  United  States  and  residents  of  the  State 

of  ,  do,  each  for  himself  and  not  one  for  the  other,  solemnly 

swear  that  we  will  severally,  so  far  as  the  duty  devolves  on  us,  dili- 
gently and  honestly  administer  the  affairs  of  said  association;  and 
that  we  will  not  knowingly  violate,  or  willingly  permit  to  be  violated, 
any  of  the  provisions  of  the  statutes  of  the  United  States  under  which 
said  association  has  been  organized;  and  each  for  himself  does  solemnly 
swear  that  he  is  the  owner  in  good  faith  and  in  his  own  right  of  the 
number  of  shares  of  stock  required  by  said  statutes,  subscribed  by 
him  or  standing  in  his  name  on  the  books  of  the  said  association;  and 
that  the  same  is  not  hypothecated,  or  in  any  way  pledged  as  security 
for  any  loan  or  debt. 

Signature.  |  Residence. 

Subscribed  and  sworn  to  this day  of ,  19 — ,  before  the 

undersigned,  a in  and  for  said  county. 

[SEAL.]  Notary  Public. 


213 

Note. — If  the  officer  administering  the  oath  has  no  seal,  a  certificate 
of  the  proper  State,  county,  or  court  official  to  the  effect  that  such 
officer  is  authorized  to  take  acknowledgments  must  be  attached. 

The  form  for  single  oath  of  director  is  the  same  as  the  joint 
oath,  excepting  that  it  is  prepared  for  an  individual.  The  Comp- 
troller sends  copies  of  both  forms,  but  the  execution  of  either 
is  sufficient,  the  individual  forms  being  for  use  in  case  of  absence 
of  a  director  at  time  of  organizing. 

Not  Necessary  to  Provide  for  Increasing  Capital  Stock. — It 
was  once  required  to  provide  in  the  articles  of  association  for  an 
increase  of  the  capital  stock  (Section  5142,  Eevised  Statutes),  but 
Buch  a  provision  is  no  longer  necessary,  for  the  Act  of  May  1, 
1886,  authorizes  shareholders  owning  two-thirds  of  the  shares, 
with  the  approval  of  the  Comptroller,  to  increase  the  capital  stock 
at  any  time  and  to  any  amount. 

Provision  for  lien  on  Stock  Invalid. — Formerly  it  appears  to 
have  been  not  unusual,  for  the  persons  forming  an  association, 
to  incorporate  in  either  the  articles  of  association  or  the  by-laws, 
and  in  stock  certificates,  a  provision  to  the  effect  that  no  shareholder, 
when  indebted,  either  directly  or  indirectly,  to  the  bank,  could 
transfer  his  stock  without  the  consent  of  the  directors.  This  is  a 
very  common  provision  in  the  articles  of  association  and  by-laws 
of  other  than  National  banks  and  of  moneyed  corporations  gen- 
erally, and  is,  no  doubt,  an  excellent  one  where  the  policy  of  the 
law  admits  of  it.  But  the  Supreme  Court  of  the  United  States 
has  held  that  any  such  regulation  adopted  by  a  National  bank  is 
void,  because  the  bank  would  thus  acquire  an  interest  in  its  own 
stock  in  violation  of  Section  5201,  Eevised  Statutes.  (Bank  v. 
Lanier,  11  Wall.,  369.) 

Official  Signatures.— The  Comptroller  requires  that  the  official 
signatures  of  the  officers  of  the  bank  be  furnished  him  with  the 
organization  papers.  The  officers  should  be  promptly  elected  to 
avoid  any  delay  in  the  execution  of  papers  of  the  association  re- 
quiring their  signatures. 


214 

The  seal  of  the  bank  is  required  to  attest  the  signatures;  yet, 
if  it  has  not  been  made,  the  signatures  should  be  forwarded,  and 
later  the  Comptroller  will  send  another  blank  for  execution  with 
seal. 

This  paper  must  not  antedate  the  Oaths  of  Directors. 

The  form  is  as  follows : 

To  the  Comptroller  of  the  Curency: 

OFFICIAL    SIGNATURES    of    the    President.    Vice-Presidents, 

Cashier,  and  Assistant  Cashiers  of  "  The 

National  Bank 

of  "  appointed 

at  a  meeting  of  the  Board  of  Directors  held  on  the day 

of ,  190. .,  as  follows  iOriffinal  signatures  necessary. 1 

Note. — The  signatures  of  oflBcers  should  be  forwarded  annually,  al- 
though no  change  may  have  taken  place,  and  this  paper  will  be  returned 
for  correction  unless  these  directions  are  followed:  (1)  The  signatures 
of  the  Vice-President  and  Assistant  Cashier  must  be  given,  if  the  bank 
have  such  officers,  in  addition  to  those  of  the  President  and  Cashier.  (2) 
Write  the  word  "none"  where  the  office  is  vacant.  (3)  Affix  the  seal 
of  the  bank  in  the  place  designated.  (4)  Fill  in  the  title  of  the  bank, 
and  be  careful  to  insert  date  of  appointment  of  officers.  (5)  Promptly 
forward  to  the  Comptroller  of  the  Currency. 

The  Organization  Certificate. — ^The  next  step  is  to  execute  an 
organization  certificate.  The  provisions  to  be  made  in  this  certifi- 
cate are  specially  set  forth  in  the  statute  (Section  5134,  Revised 
Statutes),  viz.: 

First.  The  name  assumed  by  such  association,  which  name  shall 
be  subject  to  the  approval  of  the  Comptroller  of  the  Currency. 

Second.  The  place  where  its  operations  of  discount  and  deposit 
are  to  be  carried  on,  designating  the  State,  Territory,  or  District 
and  the  particular  county  and  city,  town,  or  village. 

Third.  The  amount  of  capital  stock  and  the  number  of  shares 
into  which  the  same  is  to  be  divided. 

Fourth.  The  names  and  places  of  residence  of  the  shareholders 
and  the  number  of  shares  held  by  each  of  them. 

Fifth.  The  fact  that  the  certificate  is  made  to  enable  such  per- 
sons to  avail  themselves  of  the  advantages  of  the  National  Bank  Act. 

Every  one  of  these  provisions  must  be  stated  clearly  and  definitely 
in  the  certificate,  but  nothing  else  should  be  included  in  it. 


215 

The  following  is  the  form  for  the  organization  certificate,  fur- 
nished by  the  Comptroller  of  the  Currency: 

Obganization  Cebtificate. 

We,  the  undersigned,  whose  names  are  specified  in  article  fourth  of 
this  certificate,  having  associated  ourselves  for  the  purpose  of  organiz- 
ing an  association  for  carrying  on  the  business  of  banking  under  the 
laws  of  the  United  States,  do  make  and  execute  the  following  organiza- 
tion certificate: 

First.    The  name  of  the  association  shall  be  "The 


t» 


Second.    The  said  association  shall  be  located  in  the of , 

county  of and  State  of ,  where  its  operations  of  discount 

and  deposit  are  to  be  carried  on. 

Third.    The  capital  stock  of  this  association  shall  be  dollars 

(I ),  and  the  same  shall  be  divided  into  shares  of  one 

hundred  dollars  each. 

Fourth.  The  name  and  residence  of  each  of  the  shareholders  of  this 
association,  with  the  number  of  shares  held  by  each,  are  as  follows: 


Name.  |  Residence.  |      Number  of  shares. 

Fifth.    This  certificate  is  made  in  order  that  we  may  avail  ourselves 
of  the  advantages  of  the  aforesaid  laws  of  the  United  States. 

In  witness  whereof  we  have  hereunto  set  our  hands  this day 

of 190—. 

[Signatures  of  incorporators.] 

State  of . 


County  of 


:    }**•• 


On  this  the day  of A.  D.  190 — ,  before  me,  a of 

,  personally  came ,  to  me  well  known,  who  severally 


acknowledged  that  they  executed  the  foregoing  certificate  for  the  pur- 
poses therein  mentioned. 
Witness  my  hand  and  seal  of  office  the  day  and  year  aforesaid. 


[Seal  of  notary  or  Judge  of  court.] 

Must  be  Signed  and  Acknowledged. — The  persons  signing  the 
articles  of  association  must  also  sign  the  organization  certificalo 
(Section  5134,  Revised  Statutes),  and,  in  addition,  each  person 
signing  such  certificate  is  required  to  acknowledge  his  signa- 
ture thereto  before  a  notary  public  or  a  judge  of  some  court  of 


216 

record.  (Section  5135,  Revised  Statutes.)  In  acknowledging 
signatures  see  that  names  are  properly  spelled  if  inserted  by  notary 
or  person  other  than  incorporators. 

Before  What  Officer  Acknowledgement  Can  Be  Made. — The  ac- 
knowledgment must  be  made  before  one  of  the  officers  specified 
above,  but  before  no  other.  The  acknowledgment  can  not  be  taken 
by  the  clerk  of  the  court. 

Officer  Must  Affix  Seal. — The  acknowledgment  must  be  authen- 
ticated by  the  seal  of  the  notary  or  court.  This  requirement  is 
not  dispensed  with  by  any  State  law,  that  notaries  are  not  re- 
quired to  have  seals,  and  no  certificate  from  a  State  officer  or 
other  evidence,  that  the  attesting  officer  is  a  notary  public  and 
qualified  to  take  acknowledgments,  will  answer  in  place  of  a  seal. 
The  seal  of  the  court  may,  of  course,  be  affixed  by  the  clerk  of  the 
court,  but  it  must  not  be  understood  because  the  clerk  may  affix 
the  seal  that  the  acknowledgment  may  be  taken  by  him. 

By  Whom  Organization  Certificates  Executed. — The  organiza- 
tion certificate  must  be  signed  by  the  same  persons  who  execute 
the  Articles  of  Association ;  others  also  may  sign  if  for  any  special 
reason  their  signatures  are  desired,  but  they  must  be  subscribers 
to  the  stock  of  the  proposed  bank,  and  it  is  usually  beat  not  to 
have  these  papers  signed  until  all  preliminary  matters  are  ar- 
ranged as  it  sometimes  happens  that  persons  who  were  to  be 
corporators,  for  one  reason  or  another,  decide  not  to  take  part  in 
the  proposed  organization. 

It  is  not  necessary  that  all  the  subscribers  to  stock  should  Join  in 
executing  these  papers.  The  Comptroller  holds  that  five  of  the 
subscribers  are  sufficient,  and  to  save  the  trouble  of  obtaining: 
many  signatures  often  a  few  subscribers  are  selected  for  this 
purpose ;  but  the  names  of  all  subscribers  to  the  stock  must  be  listed 
in  the  organization  certificate,  with  their  places  of  residence, 
though  not  necessarily  in  their  own  handwriting.  (R.  S.,  Sec. 
5134.) 

The  names  of  those  who  sign  the  application  for  permission  to 
organize  the  bank  must  appear  in  the  organization  certificate  as 


217 

corporators  or  at  least  as  shareholders,  otherwise  waiver  of  right 
to  participate  in  the  organization  of  any  one  or  more  such  appli- 
cants, not  participating,  must  be  furnished  the  Comptroller.  In 
the  event  that  less  than  a  majority  of  the  applicants  are  parties 
to  the  organization  either  as  corporators  or  stockholders,  the  Comp- 
troller will  not  permit  the  organization  to  proceed  until  waivers 
are  submitted  and  satisfactory  information  furnished  as  to  the 
character  and  financial  standing  of  the  successors  of  the  non-par- 
ticipating applicants. 

When  Organization  Papers  Should  be  Filed. — It  is  best  to  file 
the  articles  and  organization  certificate  with  the  Comptroller  as 
soon  as  executed,  for  until  filed  the  association  cannot  act  as  a 
body  corporate.  (Sec.  5136,  E.  S.)  The  other  papers  should 
also  be  filed  as  soon  as  possible,  so  that  if  there  are  any  errors  they 
may  be  corrected;  then  when  the  fifty  per  cent,  of  capital  has 
been  paid  in  and  certified  to  the  Comptroller  and  bonds  deposited 
there  will  be  no  delay  in  chartering  the  bank. 

Association  Becomes  Body  Corporate. — When  the  articles  of 
association  and  organization  certificate  have  been  executed  and 
filed  with  the  Comptroller,  the  association  becomes  a  body  corpo- 
rate from  the  date  on  which  the  organization  certificate  was  exe- 
cuted. (Section  5136,  R.  S.)  It  can  then  enter  into  contracts 
as  a  corporation,  call  for  payments  upon  capital  stock  and  transact 
in  its  corporate  name  and  capacity  any  business  incidental  and 
necessarily  preliminary  to  beginning  the  banking  business.  (Sec- 
tion 5136,  R.  S.) 

The  U.  S.  Supreme  Court  has  held  (McCormick  vs.  Market 
National  Bank,  Chicago,  165  U.  S.,  538)  that  a  lease  or  purchase 
of  a  banking  house  may  not  be  contracted  for  until  the  bank  has 
been  fully  organized  and  chartered,  nevertheless  the  parties  in- 
terested may  secure  an  option,  and  thus  hold  the  property  until 
the  lease  or  purchase  can  be  legally  made. 

Payment  on  Stock  Required. — Section  5168,  R.  S.,  requires  that 

at  least  50  per  cent,  of  the  capital  stock  be  paid  in  and  certified  to 

the  Comptroller  before  a  National  bank  can  be  chartered.    Delay 
16 


218 

may  be  avoided  by  a  few  of  the  subscribers  to  the  stock  making 
payments  sufficient  to  cover  this  requirement  without  waiting  to 
receive  the  pro  rata  proportion  from  all  the  subscribers ;  still  it  is 
a  question,  in  view  of  the  provisions  of  Section  5141,  relative  to 
the  sale  of  stock  of  delinquent  stockholders  whether  this  course 
is  advisable.  The  pointy  however,  has  never  been  submitted  for 
legal  determination. 

Calling  for  Payment  on  Stock. — The  directors  may  call  for  the 
payment  of  50  per  cent,  of  the  capital  stock  at  any  time,  unless 
the  stock  has  been  taken  on  some  agreement  to  the  contrary,  as, 
that  the  payment  shall  not  be  called  for  before  a  certain  date  or 
before  the  happening  of  a  certain  event.  The  authority  of  the 
directors  to  call  for  further  payments  on  subscriptions  to  stock 
would  appear  to  be  limited  by  Section  5140,  Kevised  Statutes, 
which  provides  that  after  the  first  payment  of  50  per  cent,  of  the 
capital,  the  balance  shall  be  paid  in  monthly  installments  of  at 
least  10  per  cent.,  beginning  one  month  from  the  date  of  the  issue 
of  charter.  It  might  be  held  that  this  section  merely  pre- 
scribes the  time  within  which  the  capital  must  be  paid  in.  The 
point  has  never  been  judicially  determined.  A  fair  construction 
of  the  section  referred  to  would  seem  to  give  a  subscriber  to  stock 
the  right  to  make  payment  in  such  monthly  installments,  unless 
a  special  agreement  has  been  entered  into  by  the  subscribers,  au- 
thorizing the  board  to  call  for  payments  of  stock  at  pleasure,  or 
in  larger  installments  than  is  required  by  law.  The  second  and 
subsequent  payments  of  course  need  not  be  restricted  to  10  per 
cent,  each,  as  the  capital  stock  may  be  paid  if  desired  in  advance 
of  the  time  required  by  law.  Certificates  to  the  Comptroller  of 
payments  of  installments  should  not  include  a  fraction  of  a  dollar. 

Book  Entry  of  Payments  on  Subscriptions. — Payments  on  sub- 
scriptions to  capital  stock  should  not  be  carried  to  stock  account, 
nor  entered  in  reports  of  condition  to  the  Comptroller  as  capital 
stock  until  these  payments  are  certified  to  the  Comptroller.  Prior 
thereto  they  should  be  credited  to  shareholders  in  a  separate  ac- 
count and  entered  in  the  reports  to  the  Comptroller  under  head- 
ing "  Liabilities  other  than  those  stated  "  or  "  capital  paid  in,  not 
certified." 


219 

Certificate  of  Payment  on  Stock. — ^When  fifty  per  cent,  of  the 
capital  stock  has  been  paid  in  it  is  required  by  Section  516S, 
Eevised  Statutes,  that  this  be  certified  to  the  Comptroller  by  the 
president  or  cashier  and  a  majority  of  the  directors  of  the  bank. 

The  form  of  such  certificate  is  as  follows; 

Cebtipicate  op  Officebs  and  DnsECTOBS  TO  Payment  of  Capital  Stock. 


190—. 


The   undersigned,   oflacers   and   directors   of  ,    located 

at  ,  organized  under  the  provisions  of  the  Revised  Statutes  of 

the  United  States  authorizing  the  organization  of  National  banking 
associations    do  hereby  certify  that  of  the  authorized  capital   stock 

of  % there  has  been  paid  into  said  bank,  in  cash,  as  permanent 

capital,  $ ,  constituting  the  first  installment,  and  that  no  part 

of  this  sum  is  represented  by  promissory  notes  or  other  evidences  of 
debt;  also  that  th«  name  and  place  of  residence  of  each  director,  and 
the  amount  of  stock  individually  owned  in  good  faith,  are  as  follows: 


Name  of  Director. 


Place  of  Residence. 
(Town  or  City  and  State.) 


Number  of  Shares 
of  Stock. 


Note. — The  names,  etc.,  of  all  the  directors  of  the  association  must 
be  listed,  but  only  a  majority  of  the  directors  and  the  president  or 
cashier  are  required  to  certify  and  make  acknowledgment. 

It  is  further  certified  that  the  association  has  in  good  faith  complied 
with  all  of  the  provisions  that  are  required  to  be  complied  with  before 
receiving  authority  to  commence  the  business  of  banking. 

[Signature  of  President  or  Cashier.] 

[Signatures  of  a  majority  of  the  directors.] 

State  of , 


County  of 


:  }  "•■ 


Before  the  undersigned,  a of ,  personally  appeared  the 

above-named  directors  and  other  ofllcers  of  the  aforesaid  National  bank, 
and  made  oath  that  the  foregoing  certificate  and  the  matters  and  things 
therein  set  forth  are  true  to  the  best  of  their  knowledge  and  belief. 

Witness  my  hand  and  seal  of  ofllce  this day  of ,  190 — . 


[Official  seal  of  officer.] 

The  Deposit  of  Bonds. — The  organization  papers  including  oaths 
of  directors  and  certificate  of  payment  of  first  installment  of 
capital  stock  having  been  filed  with  the  Comptroller,  it  only  re- 


220 

mains  to  make  the  required  deposit  of  United  States  bonds. 
These  bonds  must  be  assigned  to  "the  Treasurer  of  the  United 
States  in  trust''  for  the  bank  to  be  chartered.  A  certain  deposit, 
Lccording  to  capital,  is  required  by  law  whether  a  bank  takes  out 
circulation  or  not.  The  bonds  must  be  registered,  but  coupon 
bonds  will  be  accepted,  the  Secretary  of  the  Treasury  being  au- 
thorized to  receive  and  issue  registered  bonds  for  them,  bearing 
same  interest,  etc.  The  minimum  amount  of  bonds  required  to 
be  deposited  is  as  follows : 

1.  For  bank  of  $150,000  capital  or  less,  an  amount  equal  to  one- 
fourth  of  the  capital  stock. 

2.  For  a  bank  with  capital  over  $150,000,  a  minimum  of 
$50,000. 

The  Comptroller's  Certificate. — ^When  the  bank  has  complied 
with  all  these  conditions,  the  Comptroller  issues  a  certificate  that 
it  is  authorized  to  begin  business  under  the  National  Bank  Act, 
and  he  then  wires  the  bank  its  charter  number  and  authority  to 
begin  business.  The  bank  may  open  for  business  on  receiving 
advice  that  the  charter  has  been  issued,  without  awaiting  receipt 
of  the  document. 

Certificate  Must  be  Published. — ^The  bank  must  publish  the 
Comptroller's  certificate  for  at  least  sixty  days  in  a  newspaper 
published  in  the  city  or  county  where  the  bank  is  located.  (Sec- 
tion 5170,  E.  S.)  An  insertion  in  a  weekly  newspaper  or  a 
weekly  edition  of  a  daily  is  sufficient.  The  oath  of  the  publisher 
that  the  certificate  has  been  published  for  the  time  required,  with 
printed  copy  of  certificate  attached,  cut  from  the  newspaper, 
must  be  filed  in  the  Comptroller's  office. 

Circulating  Notes. — It  is  optional  with  a  National  bank  whether 
it  issues  circulating  notes  or  not,  but  as  the  law  requires  a  cer- 
tain bond  deposit  to  be  maintained  with  the  U.  S.  Treasurer, 
regardless  of  note  issue,  the  banks^  with  few  exceptions,  take  out 
circulation. 


221 


Signing  Circulating  Notes. — Section  5172,  Kevised  Statutes, 
requires  that  circulating  notes  of  National  banks  shall  be  at- 
tested by  the  signatures  of  the  president  or  vice-president  and  the 
cashier,  but  the  Act  of  July  12,  1892,  provides  that  all  such  notes 
"issued  to  or  received  by  any  National  bank,  though  they  may 
have  been  lost  or  stolen  from  the  bank  and  put  in  circulation  with- 
out the  signatures  above  referred  to,"  shall  be  redeemed  by  the 
bank.  Such  being  the  case,  and  no  penalty  being  attached  for 
failure  to  affix  signatures,  many  of  the  banks  have  them  litho- 
graphed, printed,  or  even  stamped  with  rubber  stamp. 

Order  for  Circulation. — A  National  banking  association  is  en- 
titled to  circulating  notes  to  the  amount  of  the  face  value  of  the 
U.  S.  bonds  deposited  as  security  therefor,  unless  the  market 
value  of  the  bonds  is  below  par,  and  is  entitled  to  a  total  amount 
equal  to  its  capital  stock  paid  in  and  certified  to  the  Comptroller 
of  the  Currency,  but  not  over  one-third  in  five-dollar  notes.  An 
order  for  plates  and  notes  should  be  sent  to  the  Comptroller,  with 
the  organization  papers. 

The  Comptroller  furnishes  a  blank  for  the  order  as  follows: 


Oeiginal  Oeder  fob  Plates  aitd  Cibcxjlation. 
National Bank  of ,  


-,  190- 


To  the  Comptroller  of  the  Currency: 

You  are  requested  to  have  plates  engraved  for  this  bank,  the  cost  to 
be  paid  upon  demand,  and  circulating  notes  printed  therefrom,  as 
follows: 


Cost  of 
Plates. 


175. 
75. 
50. 


No.  of  Sheets 
Ordered. 


Denominations 
on  Sheets. 


Value 
per  Sheet 


$5,  $5,  $5,  $5 .  - . 
$10,  $10,  $10,  $20 

$50,  $100 

Total 


$20.. 
50.. 
l.'SO. 


Amount  of 
Circulation. 


Cashier. 


Amount  and  Kind  of  Notes. — Original  orders  for  circulation  should  be 
for  one  and  one-fourth  of  the  par  value  of  bonds  to  be  deposited.  Circu- 
lation ordered  in  excess  of  the  bonds  deposited  will  be  retained  by  the 
Comptroller  to  replace  mutilated  notes  received  for  redemption  and 
destruction. 


222 

The  Act  of  March  14,  1900,  provides  that  no  national  bank  shall  he 
entitled  to  receive  from  the  Comptroller,  or  to  issue  more  than  one-third 
in  amount  of  its  circulating  notes  of  the  denomination  of  $5.  Banks 
desiring  the  full  amount  of  circulation  to  which  they  are  entitled,  in- 
cluding notes  of  the  denomination  of  $5,  must  order,  at  least,  two  plates. 

Time  for  Printing  Notes. — It  will  require  about  forty  days  to  engrave 
the  plate  and  to  print  circulating  notes,  but  the  order  can  not  be  acted 
upon  until  all  legal  requirements  are  satisfied,  including  the  deposit  of 
bonds  with  the  Treasurer  of  the  United  States,  as  the  charter  number 
of  the  association,  which  can  not  be  previously  determined,  must  appear 
upon  the  plate  from  which  the  notes  are  printed. 

Cost  of  Engraving  Plate. — There  is  no  charge  for  printing  the  circu- 
lating notes  of  a  National  bank,  but  a  charge  as  noted  above  is  made  for 
engraving  plates.  The  plate  generally  ordered  by  banks  is  for  $10  and 
$20  notes.  No  orders  will  be  accepted  for  any  combination  of  notes 
different  from  those  specified. 

Preparation  of  Organization  Papers. — The  foregoing  instmc- 
tions  if  carefully  followed  should  save  the  delay  of  the  return  of 
papers  by  the  Comptroller  for  correction,  but  we  have  found  that 
frequently  errors  are  made,  and  many  of  the  banks  organizing 
send  their  papers  to  us  when  executed  to  examine  and  make  any 
corrections  called  for  that  do  not  require  to  be  made  by  the 
organizers  themselves  or  by  the  notary. 

Our  firm  has  represented  National  banks  before  the  Treasury 
Department  for  over  thirty  years,  and,  from  long  experience,  is 
in  position  to  render  efficient  service  in  preliminary  matters  of 
organization,  for  which  service  we  make  no  charge,  and  after  the 
organization  is  completed  act  as  attorney  here  for  a  small  annual 
fee. 

Purchase  of  Bonds. — We  are  in  close  touch  with  the  large  dealers 
in  Government  bonds,  therefore  are  able  to  secure  for  the  banks 
the  amount  they  require  for  deposit  with  the  United  States  Treas- 
urer at  the  lowest  market  price. 


223 


KEORaANIZATION  OF  STATE  AND  PRIVATE  BANKS. 

Where  it  is  proposed  to  reorganize  a  State  or  private  bank 
as  a  national  banking  association  it  is  necessary  to  close  the 
old  bank  in  conformity  with  the  provisions  of  the  laws  of  the 
State  governing,  in  which  the  bank  is  located,  and  then  effect  a 
new  organization  in  conformity  with  the  provisions  of  the  Na- 
tional Banking  Act,  the  procedure  being  the  same,  in  so  far  as 
the  execution  of  the  corporate  papers  is  concerned  and  the  pay- 
ment of  capital,  as  though  the  organization  was  not  to  succeed  any 
other  bank. 

It  is  assumed  that  the  resolution,  or  other  legal  action  on  the 
part  of  the  stockholders  of  the  State  bank  placing  it  in  liquida- 
tion, will  be  coupled  with  a  provision  for  the  organization  of  the 
National  bank  as  its  successor,  in  order  that  the  interests  of  the 
stockholders  of  the  old  bank  may*be  conserved  in  the  new  asso- 
ciation. 

When  the  proposed  incorporators  of  the  National  bank  have 
filed  an  application  with  the  Comptroller  of  the  Currency  for 
reservation  of  title  and  authority  to  organize,  and  approval  thereof 
is  received,  they  may  immediately  proceed  with  the  organization 
of  the  association. 

Payment  of  Capital. — The  Comptroller  construes  the  law  as 
requiring  the  payment  of  capital  stock  of  a  National  bank  in  cash^^^ 
not  in  not^s  or  other  evidences  of  debt;  it  therefore  will  be  found 
advisable  to  collect  from  the  most  liquid  assets  of  the  State  bank 
the  amount  necessary  to  enable  the  shareholders  to  pay  their  sub- 
scriptions to  the  stock  of  the  National  bank ;  that  is,  fifty  per  cent, 
prior  to  being  authorized  to  begin  business,  and  the  balance  in 
monthly  installments  of  ten  per  cent.  each.  The  directors  may 
then  contract  with  the  liquidating  agent  of  the  closed  bank  for 
the  assumption  of  liabilities  to  depositors  and  other  creditors  on  a 
transfer  of  an  equivalent  amount  of  assets  of  a  character  which 
can  be  held  by  a  National  bank. 

The  construction  of  the  law  that  pajrment  of  capital  is  to  be 
made  in  cash  is  doubtless  correct,  although  it  is  not  specifically 
BO  stated. 


224 

In  case  a  State  bank  wishes  to  effect  a  change  to  the  National 
system  without  delay,  and  a  sufficient  amount  of  the  assets  cannot 
be  converted  at  once  into  cash  to  enable  the  stockholders  to  make 
the  50  per  cent,  payment  on  capital  required,  it  would  appear  that 
a  credit  might  be  given  or  loan  made  to  the  stockholders  of  the 
State  bank  by  said  bank  on  their  stock  or  other  security,  so  that 
they  could  pay  the  assessment  on  their  stock  in  the  new  bank,  in 
part  or  whole  by  check.  These  payments  being  then  passed  to  the 
credit  of  the  stockholders  would  be  sufficient  evidence  of  payment, 
and  satisfy  the  requirements:  some  such  arrangement  would  seem 
to  be  perfectly  legitimate.  The  subscription  to  the  stock  of  the 
new  bank  by  the  stockholders  of  the  old  bank  and  the  purchase  of 
assets  of  the  old  bank  are,  practically,  mere  matters  of  entry  and 
counter  entry  on  the  books.  A  portion  at  least  of  the  capital 
paid  in  is  at  once  to  be  re-invested  in  assets  of  the  State  bank,  such 
as  bank  building,  etc.,  thus  really  returning  the  payments  on 
stock  to  the  stockholders  for  their  interests  in  the  assets  of  the 
liquidating  bank. 

The  requirement  that  only  fifty  per  cent,  of  the  capital  be  paid 
at  once  when  a  bank  reorganizes  is  sometimes  an  inducement  to 
adopt  this  method  in  preference  to  conversion  when  a  portion 
of  the  assets  of  the  bank  are  not  readily  convertible  into  cash. 

Certificate  Regarding  Assets. — The  organization  papers  should 
be  accompanied  by  a  statement  of  the  directors  to  the  effect  that 
no  assets  the  holding  of  which  contravene  the  provisions  of  the 
National  banking  law  will  be  purchased  or  otherwise  acquired 
by  the  association,  the  statement  being  in  the  following  form  and 
language : 

Certificate,  Non-acquibement  of  Peohibited  Assets. 

We,  the  undersigned,  a  majority  of  the  board  of  directors  of  the 

National  Bank  of  ,  in  the  of  ,   State  of 

,  hereby  certify  that  any  assets  purchased  or  which  may  be  other- 
wise acquired  by  said  association  from  the Bank  of ,  will 

not  include  real  estate,  except  banking  premises,  stocks,  loans  secured 
by  real  estate,  nor  any  loan  in  excess  of  10  per  cent,  of  the  paid-ia 
capital  stock  of  the  National  bank.  [Signatures  of  Directors.] 

Subscribed  and  sworn  to  before  me, ,  this day 

,  190—. 

[Notorial  Seal.]  ■■■■■  '  ■■  ,  Notary  Public 


225 

These  papers,  having  been  filed  with  the  Comptroller,  and  the 
required  deposit  of  bonds  made,  the  Comptroller  will  issue  his 
certificate  authorizing  the  bank  to  begin  business. 

Pnrchase  of  Assets  of  Liquidating  Bank. — The  National  bank, 
in  acquiring  the  business  of  the  State  or  private  bank,  necessarily 
enters  into  a  specific  contract  for  the  purchase  of  assets  and  as- 
sumption of  liabilities  to  depositors  and  other  creditors  of  the 
liquidating  bank.  In  such  cases  bills  receivable  and  other  assets 
should  be  listed,  carefully  scrutinized  and  properly  endorsed;  the 
banking  house,  if  purchased,  deeded  to  the  new  bank,  and  the  deed 
recorded ;  all  general  and  individual  accounts  closed  and  transferred 
and  new  accounts  opened  and  old  pass  books  called  in  and  new 
books  issued. 

Keorganization  of  a  Private  Bank. — The  reorganization  of  a 
private  bank  requires  a  similar  proceeding  as  that  of  a  State  bank, 
excepting  that  it  is  presumed  the  proprietors  have  authority,  as 
individuals,  to  terminate  their  business  and  sell  and  transfer  the 
assets  to  the  National  bank  which  is  organizing. 

Business  Unintemipted. — Arrangements  may  be  made  to  enable 
the  bank  reorganized  as  a  National  bank  to  begin  business  simul- 
taneously with  the  closing  of  the  State  or  private  bank  which  it 
succeeds,  so  that  there  need  be  no  interruption  in  the  business  of 
the  bank. 

We  will  be  glad  to  furnish  any  further  information  desired,  or 
assist  in  effecting  reorganization  without  charge.  Papers  when 
executed  may  be  sent  us  to  examine  before  filing  with  the  Comp- 
troller. We  also  are  in  position  to  furnish  Government  bonds  for 
deposit  with  the  United  States  Treasurer  at  the  lowest  price. 


226 


COITTEESION  OF  STATE  BANK  TO  NATIONAL. 

The  National  Bank  Act  provides  (Section  5154,  Kevised 
Statutes,)  that  an  incorporated  State  bank  may  enter  the  National 
System  by  conversion,  the  bank  continuing  without  reorganization. 
This  plan  is  sometimes  found  advantageous,  although  generally  it 
is  found  to  be  preferable  to  close  up  the  affairs  of  the  old  bank  and 
reorganize.  * 

Only  Incorporated  Banks  Can  Convert. — A  bank  proposing  to 
convert  to  a  National  bank  must  be  a  State  institution  incor- 
porated either  by  special  charter  or  under  some  general  statute. 

Capital  of  Bank. — A  State  bank  converting  must  have  a  capital 
paid  in  and  unimpaired  of  not  less  than  the  amount  prescribed 
by  the  National  Bank  Act  (see  amount  required  as  given  under 
organizing  de  novo).  When  it  is  necessary  to  increase  capital  of 
bank  to  convert,  it  depends  upon  the  requirements  of  the  laws  of 
the  State  in  which  the  bank  is  located  whether  it  is  better  to  in- 
crease under  State  laws,  and  then  convert,  or  to  put  the  State 
bank  in  liquidation  and  reorganize.  Sometimes  considerable  delay 
is  avoided  by  taking  the  latter  course.  When  a  bank  increases 
its  capital  before  conversion  the  Comptroller  requires  as  evidence 
of  payment  of  such  increase  a  certificate  of  the  State  officer  with 
whom  the  certificate  of  increase  is  filed. 

Conversion  papers  cannot  be  lawfully  executed  prior  to  effecting 
the  necessary  increase  in  capital. 

Assets  of  Bank. — The  National  Bank  Act  prohibits  holding  real 
estate  other  than  the  banking  house  property,  loans  on  real  estate 
or  mortgages,  or  loans  in  excess  of  one-tenth  of  its  capital  (Section 
5137  and  5200,  Revised  Statutes),  and  the  Courts  hold  that  it  is 
ultra  vires  of  a  National  bank  to  invest  its  funds  in  the  stock  of 
any  other  corporation.  The  Comptroller,  therefore,  requires  that 
a  State  bank  shall  liquidate  such  assets  before  being  chartered  as 
a  National  bank,  although  if  the  assets  of  a  State  bank  have  been 
JaFfBlly  acquired  under  its  State  charter  and  the  bulk  of  them  are 


227 

found  to  be  such  as  a  National  bank  can  hold,  the  Comptroller  may 
charter  the  bank  under  guarantee  that  the  balance  will  be  liqui- 
dated within  a  specified  time. 

Examination. — In  order  to  ascertain  the  condition  of  a  bank  pro- 
posing to  convert,  the  Comptroller  orders  an  examination  before 
granting  it  a  charter  as  a  National  bank. 

Directors  Continue  to  Be  Such. — The  board  of  directors  of  the 
State  bank  (if  composed  of  not  less  than  five  members)  may  con- 
tinue in  oflBce  imtil  the  first  annual  election,  regardless  of  the 
number  of  shares  owned  by  each  director  (Section  5144,  K.  S.). 
But  the  directors'  oath  must  be  taken  and  forwarded  to  the 
Comptroller  with  the  conversion  papers. 

At  the  time  the  first  annual  election  is  held  subsequent  to  conver- 
sion, every  shareholder,  to  be  eligible  as  a  director,  must  be  the 
owner  of  at  least  10  shares  of  stock  of  the  bank,  regardless  of  its  par 
value. 

« 

Consent  of  Shareholders. — The  first  step  in  the  process  of  con- 
version is  to  get  the  assent  of  shareholders  owning  two-thirds  of 
the  capital  stock.  (Section  5154,  Revised  Statutes.)  Frequently 
this  is  done  by  merely  obtaining  the  signature  to  a  form  of  au- 
thority furnished  by  the  Comptroller  of  the  Currency,  without 
calling  a  meeting  of  shareholders  for  the  purpose  of  considering 
the  matter.  But  unless  the  signatures  of  all  the  shareholders  can 
be  so  obtained,  the  action  should  be  taken  at  a  duly  convened  meet- 
ing, thirty  days'  notice  in  writing  being  given;  for,  as  will  be  seen 
in  a  subsequent  place,  where  authority  is  given  to  any  number  of 
shareholders  less  than  the  whole  number  to  determine  any  question 
relating  to  the  corporate  business,  it  is  not  meant  that  they  can 
act  wholly  independently  of  the  other  shareholders,  without  giving 
them  any  voice  in  the  matter,  but  every  shareholder  must  be  af- 
forded an  opportunity  to  express  his  assent  or  dissent;  and,  there- 
fore, non-assenting  shareholders  are  not  bound  by  any  action  of 
the  other  shareholders  had  at  a  meeting  of  which  each  was  not 
duly  notified.  The  assent  of  the  holders  of  two-thirds  of  the 
bank   stock  having  been   obtained,   notice  should  be  given   the 


228 

Comptroller  of  the  Currency  of  intention  to  convert,  naming  the 
title  desired  and  requesting  that  proper  blanks  be  sent. 

The  following  is  the  form  furnished  by  the  Comptroller  of  the 
Currency  for  the  assent  of  the  shareholders. 

FOBM    OF    AUTHOBITY    FOE    CONVEESION. 

We,  the  undersigned,  stockholders  of  the ,  located  in  the 

of ,  county  of ,  State  of ,  having  a  capital  of 

dollars,  do  hereby  authorize  and  empower  the  directors  thereof  to 
change  and  convert  said  bank  into  a  National  banking  association 
under  the  sections  of  the  Revised  Statutes  which  authorize  the  conver- 
sion of  State  banks  into  National  asociations,  and  of  subsequent  acts 
in  addition  to  or  amendatory  thereof;  and  we  do  also  authorize  the  said 
directors,  or  a  majority  thereof,  to  make  and  execute  the  articles  of 
association  and  organization  certificate  required  to  be  made  or  contem- 
plated by  said  statutes,  and  also  to  make  and  execute  all  other  papers 
and  certificates,  and  to  do  all  acts  necessary  to  be  done  to  convert  said 

into  a  National  banking  association,  and  to  do  and  perform  all 

such  acts  as  may  be  necessary  to  transfer  the  assets  of  every  descrij)- 

tion  and  character  of  said  to  the  National  banking  association 

into  which  it  is  to  be  converted,  so  that  the  said  conversion  may  be  abso- 
lute and  complete;  and  we  do  hereby  assume,  and  authorize  the  said  di- 
rectors to  assume,  as  the  name  of  the  National  banking  association  into 

which  the  said  is  to  be  converted,  "  The  ;  "  and  we  do 

hereby  appoint ,  who  are  now  the  directors  of  the  said 

,  to  hold  their  offices  as  such  directors  until  the  regular  annual 

election  of  directors  is  held,  pursuant  to  the  provisions  of  said  Revised 
Statutes,  and  until  their  successors  are  chosen  and  qualified;  and  we  do 

hereby  authorize  the  said  directors  of  the  said  to  continue  in 

office  the  officers  of  the  said ,  or  to  appoint  or  elect  others,  as  to 

them  may  seem  best. 

In  witness  whereof  we  have  hereunto  set  our  hands  and  written 
against  our  names  the  number  of  shares  owned  by  us,  respectively,  this 
day  of ,  A.  D.  18—. 


Signatures  of  stockholders.        |    Number  of  shares  ov/ned  by  each. 


Should  Be  Presented  for  Signature  at  Shareholders'  Meeting. — 

For  the  reasons  above  mentioned  the  instrument  should  be  pre- 
sented to  the  shareholders  for  signature  at  a  special  meeting  of 
shareholders  called  for  the  purpose  of  considering  the  question  of 
conversion.     If  any  regulation  or  by-law  of  the  bank  requires  that 


229 

the  action  of  the  stockholders  at  a  corporate  meeting  shall  he  by 
ballot  (as  is  frequently  the  case),  the  "authority  for  conversion" 
should  be  put  into  the  form  of  a  resolution  and  adopted  by  a  vote 
of  the  shareholders,  and  the  Comptroller  should  be  advised  of  the 
reason  therefor. 

By  Whom  Papers  Executed. — In  the  case  of  a  conversion,  the 
articles  of  association  and  organization  certificate  are  executed  by 
the  directors,  and  not  by  the  shareholders.  (Section  5154,  Re- 
vised Statutes.)  And  it  is  not  necessary  that  all  of  the  directors 
should  join  in  the  execution  of  those  instruments;  the  statute  is 
complied  with  if  a  majority  do  so.       (Id.) 

Articles  of  Association. — The  wording  of  the  first  part  of  the 
articles  of  association  should  be  as  follows: 

Articles  of  Association. 

We,  the  undersigned,  directors  of  the having  been  authorize 3 

by  the  owners  of  two-thirds  of  the  capital  stock  of  said  bank  to  change 
and  convert  the  said  bank  into  a  National  banking  association,  under 
section  5154  of  the  Revised  Statutes  of  the  United  States,  and  of  subse- 
quent acts  in  addition  to  or  amendatory  thereof,  and  to  execute  articles 
of  association,  do  hereby,  in  our  own  behalf  and  in  behalf  of  the  stock- 
holders whom  we  represent,  make  and  execute  the  following  articles  of 
association. 

First,  the  name  and  title  of  the  association  Into  which  the  said 

is  to  be  changed  and  converted  shall  be  "  The .** 

From  this  point  the  articles  will  follow  the  form  given  under 
organization  de  novo. 

The  following  is  the  form  for  organization  certificate  furnished 
by  the  Comptroller  of  the  Currency  in  cases  of  conversion: 

Obqanization  Cebth'icate. 

We,  the  undersigned,  directors  of  the  ,  having  been  duly  au- 
thorized by  the  owners  of  two-thirds  of  the  capital  stock  of  said  bank 
to  change  said  bank  into  a  National  banking  association,  and  to  make 
the  necessary  organization  certificate,  under  the  sections  of  the  Revised 
Statutes  which  authorize  the  conversion  of  State  banks  into  National 
banking  associations,  and  of  subsequent  acts  in  addition  to  or  amenda- 


230 


tory  thereof,  do  sign  and  execute  the  following  organization  certificate, 

which  we  hereby  declare  we  are  authorized  to  make  by  the  owners  of 

two-thirds  of  the  capital  stock  of  said : 

First.    The  name  and  title  of  this  association  shall  be  "  The .'* 

Second.    The  said  association  shall  be  located  and  continued  in  the 

of ,  county  of and  State  of ,  where  its  opera- 


tions of  discount  ani  deposit  are  to  be  carried  on. 

Third.    The  capital  stock  of  this  association  shall  be  dollars 

($ ),  and  the  same  shall  be  divided  into  shares  of  

dollars  each,  as  it  is  now  divided  in  the  said  "  The .'* 

Fourth.    The  name  and  residence  of  each  of  the  stockholders  of  the 

said ,  which  is  to  become  a  National  bank  under  the  provisions  of 

the  Revised  Statutes  aforesaid,  and  the  number  of  shares  of  

dollars  each  held  by  each  stockholder  are  as  follows: 

Name.  |  Residence.  |    Number  of  shares. 

Fifth.    This  certificate  is  made  in  order  that  the  said and  the 

stockholders  thereof  may  avail  themselves  of  the  advantages  of  the 

aforesaid  Revised  Statutes,  and  that  the  said  may  be  changed 

and  converted  into  a  National  banking  association  under  the  name  and 
title  of  the . 

In  witness  whereof  we  have  hereunto  set  our  hands  this day 

of ,  eighteen  hundred  and . 

State  of , 


-.! 


County  of  ^      * 

On  this  the day  of ,  A.  D.  19—,  personally  came  before 

me,  a of  said  country^ ,  directors  of  the ,  to 

me  well  known,  who  severally  acknowledged  that  they  executed  the 
foregoing  certificate  for  the  purposes  therein  mentioned. 

Witness  my  hand  and  seal  of  office  the  day  and  year  aforesaid. 


Certificate  of  Capital  Paid  In. — ^This  is  a  certificate  of  the 
president  or  cashier  of  the  bank  to  the  Comptroller  of  the  Cur- 
rency, showing  that  the  amount  of  paid-in  and  unimpaired  capital 
of  the  bank  converting  meets  the  legal  requirement.  The  following 
is  the  form : 

Certificate  Relative  to  Payment  op  Capital  Stock  of  State  Bank 

CONVEBTINQ  INTO  NATIONAL  BANE. 

It  Is  hereby  certified,  that  The Bank of , , 

which  is  to  be  converted  into  "The  National  Bank  of 

,"  in  conformity  with  the  provisions  of  Section  5154  of  the  Re- 


231 

vised  Statutes  of  the  United  States,  authorizing  the  conversion  of  "  any 
bank  incorporated  by  special  law  or  any  banking  institution  organized 
under  a  general  law  of  any  State,"  has  a  paid  in  and  unimpaired  capital 

of  $ . 

,  President  or  Cashier. 

State  op , 

8s: 


County  of 


-.} 


Subscribed  and  sworn  to  before  the  undersigned,  a  of  the 

said  county,  this day  of ,  190 — . 


rsEAL.!  (Official  title) 

Certificates  of  Stock. — A  State  bank  converting  to  a  National 
bank  is  not  required  to  issue  new  certificates  of  stock,  although 
it  is  preferable  to  do  so.  If  the  old  certificates  are  retained  they 
should  be  stamped  to  show  the  new  corporate  title  and  date  of  the 
changed  jurisdiction. 

Closing  Affairs  of  Old  Bank. — A  State  bank  converting  must 
be  guided  by  State  statutes  as  to  closing  up  the  affairs  of  the 
bank.  Conversion  to  a  National  bank  does  not  destroy  or  change 
the  identity  or  corporate  existence  of  the  State  bank,  although  its 
charter  as  a  State  bank  then  expires.  The  bank  continues  as  a 
corporate  body  simply  under  changed  jurisdiction;  its  rights  to 
sue  and  be  sued  on  obligations  of  the  old  bank  are  not  affected. 

Conversion  or  Reorganization. — It  is  impossible  to  determine 
without  some  knowledge  of  the  status  of  a  bank  and  local  con- 
ditions which  plan  is  preferable  in  changing  to  the  National 
system.  We  are  always  pleased  to  have  banks  write  us  on  the 
subject,  and  to  advise  as  we  may  be  able  to.  We  have  had  long 
experience  in  National  bank  affairs,  and  assist  without  charge. 
Organization  papers  when  executed  may  be  sent  to  us  to  examine 
and  make  any  corrections  that  may  be  necessary  before  filing  with 
the  Comptroller,  and  we  are  always  pleased  to  furnish  Government 
bonds  required  for  deposit  with  the  United  States  Treasurer  at 
the  lowest  market  price. 


232 


BT-IAWS. 

The  power  to  adopt  by-laws  for  a  National  bank  is  conferred 
on  the  directors  by  the  National  Bank  Act  (Sec.  5136,  R.  S.),  and 
is  generally  incorporated  in  the  articles  of  association.  It  is  a 
requisite  of  every  valid  by-law  of  a  National  bank  that  it  shall  be 
consistent  with  the  National  banking  laws  and  with  the  articles 
of  association;  a  by-law  which  is  inconsistent  with  either  the  law 
or  the  articles  is  void.  Directors  often  fall  into  the  error  of 
supposing  that  because  they  have  power  to  amend  the  by-laws  they 
may  change  them  in  any  respect,  but,  as  before  stated,  no  amend- 
ment must  conflict  with  provisions  of  the  articles  of  association, 
as  these  provisions  can  be  changed  only  by  amendment  of  the 
Articles  by  the  stockholders,  and  then  only  in  conformity  with 
law.  Thus,  a  by-law  prescribing  the  number  of  directors  the 
bank  shall  have,  and  how  many  shall  constitute  a  quorum,  can  not 
be  amended  by  the  directors  to  conflict  with  any  provision  of  the 
articles  of  association. 

The  following  form  of  by-laws  has  been  found  to  cover  the 
general  requirements  of  National  banks,  but  the  by-laws  may  contain 
any  provision  not  inconsistent  with  the  law  or  articles  of  association. 

GENEEAL  FOEM  FOB  SY-IAWS. 

By-laws  of  the  Ihere  insert  the  title  of  the  hank^  organized  under  the 
laws  of  the  United  States,  and  authorized  by  the  Comptroller  of  the 
Currency  to  carry  on  the  business  of  banking. 

Elections. 

1. — ^The  regular  annual  meetings  of  stockholders  of  this  bank 
for  the  election  of  directors  and  for  the  transaction  of  other 
legitimate  business,  shall  be  held  between  the  hours  of  ten  o'clock 
A.  M.  and  four  o'clock  P.  M.  on  the  day  specified  in  the  articles  of 
association,  and  the  thirty  days'  notice  of  the  time  and  object  of 
such  meetings  thereby  required  shall  be  given  by  the  president, 
vice-president,  or  cashier  by  publication  in  linsert  location  of 


233 

paper  in  which  puhlication  is  to  "be  made.']  The  board  of  di- 
rectors shall,  within  one  month  previous  to  the  date  fixed  for 
such  meetings,  appoint  three  stockholders  to  be  judges  of  the 
election  for  directors,  who  shall  hold  and  conduct  the  election, 
and  who  shall,  under  their  hands,  notify  the  person  acting  as 
cashier  of  this  bank  of  the  result  thereof  as  soon  as  ascertained, 
and  of  the  names  of  the  directors-elect. 

2. — The  person  acting  as  cashier  shall  thereupon  cause  the  re- 
turns made  by  the  Judges  of  election  to  be  recorded  upon  the 
minute-book  of  the  bank  and  shall  notify  the  directors  chosen  of 
their  election,  and  of  the  time  for  them  to  meet  at  the  banking- 
house  for  the  organization  of  the  new  board.  If  at  the  time  fixed 
for  such  meetings  there  should  be  no  quorum  in  attendance,  the 
directors-elect  present  may  adjourn  from  time  to  time,  until  a 
quorum  shall  be  obtained. 

3. — The  directors-elect  shall  meet  for  organization,  upon  the 
notification  given  in  accordance  with  law  2,  within  one  week 
from  the  time  of  their  election,  but  shall  not  do  any  business 
whatever  prior  to  qualifying  by  taking  the  oath  of  ofllce  as  re- 
quired by  law. 

4. — If  the  annual  election  for  directors  should  not  be  held  on 
the  day  fixed  by  the  articles  of  association,  the  directors  in  oflBce 
shall  order  a  special  election,  of  which  notice  shall  be  given. 
Judges  appointed,  and  returns  made  and  recorded  upon  the  min- 
nte-book;  and  the  directors  chosen  thereat  shall  be  certified  to 
the  cashier,  and  notified  as  provided  by  laws  1  and  2. 

Officers. 

5. — The  officers  of  this  bank  shall  be  a  president,  vice-president, 
cashier,  teller  and  book-keeper,  and  such  other  officers  as  may  be 
required  from  time  to  time  for  the  prompt  and  orderly  transac- 
tion of  its  business;  and  all  officers,  clerks,  and  agents  shall  be 
elected,  appointed,  or  employed  by  the  board  of  directors,  or  with 
the  consent  thereof,  and  their  several  duties  may  be  prescribed 
by  the  board. 

6.^The  president  shall  hold  his  office  for  the  current  year  for 
which  the  board  of  which  he  shall  be  a  member  was  elected,  un- 
less he  shall  resign,  become  disqualified,  or  be  removed;  and  any 
vacancy  occurring  in  the  office  of  president  or  in  the  board  of 
directors  shall  be  filled  by  the  remaining  members. 

7. — ^The  cashier  and  the  subordinate  officers  and  clerks  shall 
be  appointed  to  hold  their  offices  respectively  during  the  pleasure 
of  the  board  of  directors. 

17 


234 

OffiCBrs. 

8. — The  cashier  of  this  bank  shall  be  responsible  for  all  the 
moneys,  funds,  and  valuables  of  the  bank,  and  shall  give  bond, 
with  security  to  be  approved  by  the  board,  in  the  penal  sum  of 

dollars,  conditioned  for  the  faithful  and  honest  discharge 

of  his  duties  as  such  cashier,  and  that  he  will  faithfully  apply 
and  account  for  all  such  moneys,  funds,  and  valuables,  and 
deliver  them  to  the  order  of  the  board  of  directors  of  this  bank, 
or  to  the  person  or  persons  authorized  to  receive  them.  [The 
'bond  usually  required  is  from  $5,000  upward,  according  to  capital 
and  volume  of  "business  of  the  bank, — a  surety  company  bond  pre- 
ferred.2 

9. — The  president  of  the  bank  shall  be  responsible  for  all  such 
such  sums  of  money  and  property  of  every  kind  as  may  be  in- 
trusted to  his  care  or  placed  in  his  hands  by  the  board  of  di- 
rectors or  by  the  cashier,  or  otherwise  come  into  his  hands  as 
president,  and  shall  give  bond,  with  security  to  be  approved  by 

the  board,  in  the  penal  sum  of  dollars,  conditioned  for 

the  faithful  discharge  of  his  duties  as  such  president,  and  that 
he  will  faithfully  and  honestly  apply  and  account  for  all  sums 
of  money  and  other  property  of  this  bank  that  may  come  into 
his  hands  as  such  president,  and  pay  over  and  deliver  them  to 
the  order  of  the  board  of  directors,  or  to  any  other  person  or 
persons  authorized  by  the  board  to  receive  them. 

10. — ^The  teller  shall  be  responsible  for  all  such  sums  of  money, 
property,  and  funds  of  every  description  as  may  from  time  to 
time  be  placed  in  his  hands  by  the  cashier,  or  otherwise  come 
into  his  possession  as  teller,  and  shall  give  bond,  with  security 
to  be  approved  by  the  board  of  directors,  in  the  penal  sum  of 

dollars,  conditioned  for  the  honest  and  faithful  discharge 

of  his  duties,  and  that  he  will  faithfully  apply,  account  for,  and 
pay  over  all  moneys,  property,  and  funds  of  every  description 
pertaining  to  this  bank  that  may  come  into  his  hands  by  virtue 
of  his  office  as  teller,  to  the  order  of  the  board  of  directors,  or  to 
such  person  or  persons  as  may  be  authorized  by  the  board  to 
receive  them. 

11. — ^The  bonds  of  the  officers  shall  be  placed  in  the  custody  of 
a  stockholder  of  this  bank,  to  be  designated  by  the  board  of  di- 
rectors, who  shall  not  be  one  of  the  bonded  officers,  to  be  sur- 
rendered by  him  only  upon  the  order  of  the  board. 

Seal.        22. — ^The  impression  made  below  is  an  impression  of  the  seal 
adopted  by  the  board  of  directors  of  this  bank. 

{Impression  of  Seal."} 


235 

Conveyance  of  Eeal  Estate. 

13. — All  transfers  and  conveyances  of  real  estate  shall  be  made 
by  the  bank,  under  the  seal  thereof,  in  accordance  with  the 
orders  of  the  board  of  directors,  and  shall  be  signed  by  the  presi- 
dent or  cashjer. 

Increase  of  Capital  Stock. 

14. — ^Whenever  an  increase  of  stock  shall  be  determined  upon 
in  accordance  with  the  articles  of  association  of  this  bank,  it 
shall  be  the  duty  of  the  board  of  directors  to  cause  all  the  stock- 
holders to  be  notified  thereof,  and  a  subscription  to  be  opened 
therefor,  specifying  the  terms  of  payment  agreed  upon  by  sub- 
scribers. Each  stockholder  shall  be  entitled  to  subscribe  for 
shares  of  the  new  stock  in  proportion  to  the  number  of  shares 
he  already  owns;  but  if  any  stockholder  shall  fail  to  subscribe 
for  such  new  stock  as  he  may  be  entitled  to,  or  to  pay  his  sub- 
scription according  to  agreement,  the  board  or  directors  shall  de- 
termine what  disposition  shall  be  made  of  the  privileges  of  sub- 
scribing for  the  new  stock  not  taken. 

Business  of  the  Sank. 

15. — This  bank  shall  be  open  for  business  from o'clock 

A.  M.  to o'clock  P.  M.  each  day,  except  Sundays  and  days 

recognized  by  the  laws  of  this  State  as  holidays. 

16. — The  board  of  directors  of  this  bank  shall  hold  regular 
meetings  at  the  banking-house  for  the  transaction  of  business  on 

of  each  week,  and  should  that  day  in  any  year  fall  upon 

a  holiday,  the  regular  meeting  for  that  week  shall  be  held  on 
such  other  day  as  the  directors  at  the  preceding  meeting  may 
order. 

The  board  may  also  hold  special  meetings  upon  the  call  of  the 
president,  cashier,  or  any  three  or  more  members,  and  whenever 
there  shall  not  be  a  quorum  at  a  regular  or  special  meeting,  the 
members  present  may  adjourn  the  meeting  from  day  to  day  until 
a  quorum  shall  be  obtained;  and  any  meeting  may  be  adjourned 
from  time  to  time  by  a  vote  of  a  majority  of  a  quorum  present, 
but  no  business  except  adjournment  shall  be  transacted  in  the 
absence  of  a  quorum. 

17. — There  shall  be  a  committee,  to  be  known  as  the  exchange 

committee,   consisting   of   the   president,   directors,    and 

cashier,  who  shall  have  power  to  discount  and  purchase  bills, 
notes,  and  other  evidences  of  debt,  and  to  buy  and  sell  bills  of 


236 

exchange;  and  who  shall,  at  each  regular  meeting  of  the  board 
of  directors,  make  a  report  of  all  bills,  notes,  and  other  evidences 
of  debt  discounted  and  purchased  by  them  for  the  bank  since 
their  last  previous  report. 

18. — The  board  of  directors  may  appoint  one  of  its  members  or 
an  officer  of  the  bank  to  act  as  its  secretary. 

19. — ^No  officer  or  clerk  of  this  bank  shall  pay  any  check  drawn 
upon  it,  or  pay  out  money  on  any  order,  unless  the  drawer  of 
such  check  or  order  shall,  at  the  time  of  the  presentation  thereof, 
have  on  deposit  in  the  bank  funds  sufficient  to  meet  such  check 
or  order. 

20. — The  earnings  of  this  bank  shall  be  disposed  of  according 
to  orders  of  the  board  of  directors,  made  at  regular  or  special 
meetings,  and  no  dividend  shall  be  paid  to  stockholders,  or  other 
disposition  of  earnings  made,  except  upon  order  of  the  board. 

21. — The  organization  papers  of  this  bank,  as  executed  and 
filed  with  the  Comptroller  of  the  Currency,  the  returns  of  judges 
of  the  elections,  the  proceedings  at  all  regular  and  special  meet- 
ings of  the  board  of  directors,  the  by-laws,  and  all  changes  and 
all  amendments  thereof,  and  the  report  of  examining  committees 
of  directors,  made  according  to  law  28,  shall  be  recorded  in  the 
minute-book;  and  the  minutes  of  each  meeting  of  the  board  shall 
be  signed  by  the  president  and  attested  by  the  cashier. 

22. — The  board  of  directors  shall  have  power  to  prescribe  and, 
when  expedient,  to  change  the  form  of  books  and  accounts  to  be 
used  in  the  transaction  of  the  business  of  this  bank,  and  to  pre- 
scribe the  general  or  particular  manner  in  which  its  affairs  shall 
be  conducted. 

Transfer  of  Stock. 

23. — ^The  stock  of  this  bank  shall  be  assignable  and  transfer- 
able only  on  the  books  of  this  bank,  subject  to  the  restriction 
and  provisions  of  the  banking  laws,  and  a  transfer  book  shall  be 
provided,  in  which  all  assignments  and  transfers  of  stock  shall 
be  made. 

24. — Transfers  of  stock  shall  not  be  suspended  preparatory  to 
the  declaration  of  dividends;  and  unless  an  agreement  to  the 
contrary  shall  be  expressed  in  the  assignments,  dividends  shall 
be  paid  to  the  stockholders  in  whose  name  the  stock  shall  stand 
at  the  date  of  the  declaration  of  dividends. 


237 

25. — Certificates  of  stock  signed  by  the  president  and  cashier 
shall  be  issued  to  stockholders,  and  the  certificates  shall  state 
upon  their  face  that  the  stock  is  transferable  only  on  the  books  of 
the  bank. 

Expense. 

26. — All  the  current  expenses  of  this  bank  shall  be  paid  by  the 
cashier,  who  shall,  every  six  months,  or  oftener  if  required,  make 
to  the  board  of  directors  a  detailed  statement  thereof. 

Contracts. 

27. — ^All  contracts,  checks,  drafts,  etc.,  for  this  bank,  and  all 
receipts  for  circulating  notes  received  from  the  Comptroller  of 
the  Currency,  shall  be  signed  by  the  president  or  cashier. 

Examinations. 

28. — There  shall  be  appointed  by  the  board  of  directors  a  com- 
mittee of members  thereof,  whose  duty  it  shall  be  to  ex- 
amine every  three  months  the  affairs  of  this  bank,  to  count  its 
cash,  and  compare  its  assets  and  liabilities  with  the  accounts  of 
the  general  ledger,  ascertain  whether  these  accounts  and  all 
others  are  correctly  kept,  whether  the  condition  of  the  bank  cor- 
responds therewith,  and  whether  the  bank  is  in  a  sound  and  sol- 
vent condition,  and  to  recommend  to  the  board  such  changes  in 
the  manner  of  doing  business,  etc.,  as  shall  seem  to  be  desirable, 
the  result  of  which  examination  shall  be  reported  to  the  board  at 
the  next  regular  meeting  thereafter. 

Qnomms. 

29. — ^A  majority  of  the  directors,  including  the  president,  (or 
in  his  absence  the  vice-president,)  shall  be  a  quorum  to  do  busi- 
ness. 

Amendments. 

30. — These  by-laws  may  be  changed  or  amended  by  the  vote  of 
two-thirds  of  the  directors. 

31. — A  copy  of  the  by-laws  of  this  bank  as  in  force  shall  be  kept 
In  a  convenient  place  In  the  bank,  to  which  any  stockholder  shall 
have  free  access  during  the  regular  hours  of  business. 


238 


MAN'AGEMEJSTT  OF  I^ATION'AL  BANKS. 

The  primary  and  principal  object  of  banking  is  loaning  money 
for  the  profit  of  the  corporation,  and  the  business  is  established  and 
maintained  by  accommodating  the  public  in  receiving  and  disburs- 
ing its  funds.  This  relation  to  the  public  calls  for  a  variety  of 
services,  and  thus  a  large  amount  of  detail  is  involved  in  the  conduct 
of  a  bank. 

The  Management  of  a  bank  is  the  Board  of  Directors,  and  under 
the  Board  an  executive  ofiicer,  generally  the  Cashier,  and  a  clerical 
force,  the  executive  officer's  assistants — tellers,  bookkeepers,  discount 
clerk,  collection  clerk  and  messenger.  In  sma.ll  banks  the  work  of 
the  clerical  force  is  done  by  two  or  three  persons,  and  in  very  large 
banks  the  work  requires  departments,  with  a  force  for  each — even 
in  the  executive  management.  It  therefore  will  be  seen  that  a  com- 
prehensive treatment  of  the  subject  would  require  more  space  than 
can  be  given  in  a  book  of  this  character ;  but  it  may  suffice  to  note 
briefly  the  duties  of  the  Management,  the  officers  and  clerical  force 
and  some  of  the  important  points  about  bank  affairs. 

The  Board  of  Directors. — ^This  is  the  responsible  representative 
of  both  shareholders  and  the  depositors  of  the  bank;  therefore 
a  shareholder  accepting  the  office  of  a  director  should  do  so  only 
after  a  very  clear  understanding  of  the  trust  he  assumes,  viz. :  his 
personal  liability  and  his  responsibility  for  the  proper  management 
of  the  affairs  of  the  bank.  Hence  the  importance  that  he  should 
inform  himself  as  fully  as  possible  from  such  evidence  as  he  can 
obtain,  especially  by  observation  within  and  outside  of  the  bank — 

First.  That  the  executive  officer  is  trustworthy  and  competent, 
and  that  the  several  employees  of  the  bank  are  of  good  character. 
This  is  seen  in  their  general  habits  and  social  relations. 

Second.  A  director  should  keep  informed  as  to  the  business 
methods  and  the  accounts  of  the  bank,  and  have  frequent  examina- 
tions made  by  a  committee  of  the  Board  of  the  cash  and  the 
books,  also  of  collaterals  and  other  valuables. 

Third.  He  should  scrutinize  carefully  the  paper  discounted, 
both  as  to  the  security  and  the  amount  of  loans,  and  see  that  all  in- 
vestments of  funds  are  reasonably  safe  and  only  such  as  a  com- 
mercial bank  should  make. 


239 

The  Comptroller  of  the  Currency  emphasizes  the  responsibility 
of  directors  by  the  following  instructions : 

"  In  order  to  obviate  any  excuse  on  the  part  of  the  directors  of 
National  banks,  based  upon  the  ground  that  they  are  not  and  have 
not  been  informed  of  the  affairs  of  the  banks  with  which  they  are 
oflQcially  connected,  and  therefore  should  not  be  held  responsible  for 
the  same,  all  letters  addressed  to  the  officers  of  banks  bearing  upon 
the  report  of  the  Examiner  are  to  be  submitted  to  the  directors,  and 
the  acknowledgment  and  answer  thereto  made  over  each  director's 
individual  signature/' 

President. — The  work  of  a  bank  President  varies  according  to  cir- 
cumstances. He  may  or  may  not  share  in  the  active  management 
of  the  bank.  As  a  rule,  it  may  be  said,  he  exercises  a  general  over- 
sight of  the  affairs  of  the  bank,  with  special  duties  in  connection 
with  his  position  as  President  of  the  Board  of  Directors. 

Vice-President. — As  the  title  indicates,  this  officer  is  authorized, 
in  the  absence  or  inability  of  the  President,  to  perform  all  acts 
and  duties  pertaining  to  the  office  of  the  President,  excepting  such 
as  the  law  specifies  shall  be  performed  by  the  President.  The 
N*ational  Bank  Act  provides  in  one  or  more  instances  that  the  Vice- 
President  may  act  in  place  of  the  President,  e.  g.,  it  provides  that  he 
may  sign  the  bank's  circulating  notes,  the  Comptroller's  office  there- 
fore holds  that  in  other  cases  where  the  Act  does  not  specifically  so 
provide  he  cannot  perform  the  duties  named  for  the  President;  for 
example,  signing  reports  of  condition  of  Bank,  etc. 

Cashier. — The  Bank  Cashier  is  usually  the  chief  executive  of- 
ficer of  the  bank.  Primarily  he  represents  the  will  of  the  Board 
of  Directors,  and  his  duty  is  to  see  that  the  policy  and  plans  for- 
mulated by  it  are  properly  carried  into  execution ;  yet  he  is  not  the 
mere  representative  and  subordinate  of  the  Board,  he  has  also 
responsibilities  as  the  chief  executive  officer  and  agent  of  the  cor- 
poration. To  him  is  generally  intrusted  the  general  management 
of  the  affairs  of  the  bank,  the  receiving  of  deposits,  the  safe  keep- 
ing of  all  funds,  and  their  disbursement.  His  judgment  is  gen- 
erally deferred  to  as  to  what  paper  the  bank  shall  discount,  and  as 
to  all  invesments  of  the  funds  of  the  bank.    He  therefore  should 


240 

be  thoroughly  conversant  with  the  laws,  customs  and  practices  of 
the  banking  business,  and  especially  of  those  of  his  office ;  he  should 
maintain  a  vigilant  oversight  of  all  the  work  of  his  subordinates, 
being  responsible  for  the  good  conduct  and  faithful  service  of  the 
clerical  force  of  the  bank.  To  the  public  the  bank  usually  is  what 
the  Cashier  is;  therefore  while  keeping  uppermost  in  mind  the 
trust  committed  to  him,  he  must  also  recognize  the  bank^s  obliga- 
tions to  the  public,  upon  which  it  is  dependent  for  its  profits.  He 
should  be  known  as  one  always  approachable,  and  ready  to  con- 
sider carefully  the  wants  of  the  bank's  customers  and  as  ready  to 
respond  generously,  so  far  as  consistent  with  his  best  judgment, 
and  if  unable  to  favor  the  customer,  to  manifest  by  kindly  manner 
his  regret. 

He  should  not  let  political  or  other  prejudices  influence  his  con- 
duct of  the  affairs  of  the  bank,  but  manage  it  as  a  business  insti- 
tution, for  the  profit  of  the  shareholders,  yet  also  for  the  benefit 
of  the  community. 

Assistant  Cashier. — This  officer  is  required  only  where  the  duties 
of  the  Cashier  are  more  than  can  be  performed  by  him.  Hence, 
the  work  of  an  assistant  is  to  relieve  the  Cashier  in  such  ways  as 
the  Cashier  or  the  Board  may  direct,  and  to  perform  his  duties 
in  his  absence,  excepting  in  such  matters  as  the  National  Bank 
Act  requires  the  action  of  the  Cashier,  the  Comptroller  holding 
that  the  Assistant  Cashier  can  only  act  instead  of  the  Cashier  in 
cases  where  the  law  so  states. 

Paying  Teller. — The  Paying  Teller  occupies  a  position  of  great 
importance,  being  the  disbursing  officer  of  the  bank,  and  having 
charge  of  its  funds.  He  should  be  a  man  above  reproach,  a  good 
judge  of  character,  of  quick  wit,  quick  action,  and  the  soul  of  good 
nature  and  forbearance. 

Eeceiving  Teller. — The  Eeceiving  Teller,  as  his  name  implies, 
receives  deposits;  sometimes  also  payments  of  collections  and  loans, 
if  the  bank  is  small  and  not  requiring  collection  and  discount 
clerks.  His  position  is  closely  related  to  the  Paying  Teller,  to  whom 
he  turns  over  his  cash  at  the  close  of  the  day.  He  should  possess 
strict  integrity,  good  ability  and  a  courteous  manner,  and  have  a 
jiatural  tact  for  handling  money  and  of  passing  on  its  genuineness. 


241 

Bookkeepers. — ^Very  great  responsibility  rests  upon  the  book- 
keepers, since  the  paying  out  of  the  funds  of  the  bank  is  governed 
by  their  records.  They  should  be  therefore  accountants  of  great 
accuracy,  understanding  thoroughly  bank  bookkeeping,  and  keep- 
ing abreast  of  the  times  in  adopting  improved  methods. 

The  General  Bookkeeper  of  a  National  bank  has  the  aggregates 
of  all  the  business  of  the  bank  coming  through  the  various  chan- 
nels, including  accounts  with  correspondent  banks,  capital  stock, 
profit  and  expense  accounts;  besides  the  usual  general  accounts  he 
keeps  an  account  with  the  U.  S.  Treasurer  and  Eeserve  Agents. 

The  Individual  Bookkeeper  has  the  accounts  of  the  local  de- 
positors. This  position  involves  a  great  amount  of  detail  and  re- 
quires great  care  and  accuracy. 

Discount  Clerk. — The  care  of  the  record  of  loans  and  receiving 
payment  for  them  falls  to  the  Discount  Clerk.  He  should  be  pro- 
ficient in  calculating  time  and  interest.  And  his  duties  being  of 
a  confidential  nature,  he  should  avoid  divulging  the  business  of  his 
desk  to  any  persons  but  those  entitled  to  know. 

Collection  Clerk. — The  Collection  Clerk  has  charge  of  the 
drafts,  bills  of  exchange,  notes,  etc.,  sent  to  the  bank  for  collection. 
He  should  be  familiar  with  the  laws  and  customs  as  to  the  various 
kinds  of  paper  placed  in  his  hands. 

The  Messenger. — The  duty  of  the  Bank  Messenger  is  to  pre- 
sent paper  to  those  who  are  to  pay  or  accept.  He  should  be  well 
posted  in  the  law  and  regulations  regarding  collections. 

Clerical  Force. — The  Clerical  Force  should  be  characterized  by 
fidelity  and  efficient  service,  and  of  this  there  should  be  due  recogni- 
tion by  the  officers  of  the  bank  in  a  kindly  word  of  appreciation 
from  time  to  time,  and,  better  still,  in  an  increase  of  salary  or  an 
extra  allowance  occasionally  when  good  dividends  are  declared. 

Verification  of  Work. — One  of  the  best  rules  for  a  bank  to 
adopt  is,  that  the  work  of  each  employee  be  examined  and  verified 
often  by  shifting  of  clerks,  under  the  direction  of  the  executive 
oflScer,  and  occasionally  full  examinations  of  the  bank  made  in  the 


242 

same  manner.  As  often  as  every  quarter  a  committee  of  directors, 
appointed  for  the  purpose,  should  make  an  examination  and  a  re- 
port thereof  should  be  entered  upon  the  minute-book. 

Appointment  and  Bonds  of  Officers. — The  officers,  other  than 
the  President,  should  be  appointed  to  hold  their  offices  indefinitely, 
and  their  bonds  should  be  executed  accordingly,  so  as  to  obviate  the 
necessity  of  requiring  annual  bonds  from  them,  and  to  prevent  the 
occurrence  of  a  time  when  they  would  not  be  under  bond. 

Presidents,  being  annually  appointed,  should  be  required  to  give 
annual  bonds;  and  in  the  appointment  or  reappointment  of  any 
officer  a  bond  should  be  required  of  him.  It  will  be  found  the  best 
policy  to  pay  all  officers  and  other  employees  liberal  but  not  ex- 
travagant salaries,  so  as  to  remove  from  them  the  temptation  of 
speculating  with  or  otherwise  wrongly  using  the  bank's  funds. 

legal  Attorney. — It  is  an  excellent  plan  for  banks  to  have  a 
special  attorney,  possibly  retained  by  the  year,  30  that  the  executive 
officer  of  the  bank  m-ay  be  able  to  command  counsel  and  decide  with 
promptness  questions  constantly  arising  which  require  knowledge 
of  the  law. 

loans  and  Disconnts. — Ample  and  undoubted  security  should 
be  required  for  all  loans,  and  of  a  readily  convertible  character  if  in 
the  shape  of  collaterals.  Let  nothing  be  done  to  encourage  specu- 
lation, but  give  facilities  only  to  legitimate  business  operations. 
Make  loans  and  discounts  on  as  short  time  as  the  needs  of  cus- 
tomers will  permit,  and  insist  upon  the  payment  of  all  paper  at 
maturity,  if  possible,  whether  the  bank  needs  the  money  or  not. 
Borrowers  should  not  be  encouraged  to  expect  extensions  and  re- 
newals of  their  paper  to  suit  their  own  convenience.  Such  practice 
is  not  the  attribute  of  good  banking,  the  proper  foundation  of 
which  is  impartiality  of  treatment,  and  the  exaction  of  the  per- 
formance of  contracts.  Never  renew  a  note  or  bill,  or  allow  it  to  lie 
unpaid,  merely  because  the  money  can  not  for  the  moment  be 
placed  to  equally  good  advantage,  for  it  is  only  by  always  requir- 
ing prompt  settlements  that  the  discount  line  can  be  controlled,  and 
made  at  all  times  reliable. 

Distribute  the  accommodations  of  the  bank  as  widely  as  possible. 


243 

rather  than  concentrate  them  in  a  few  hands;  for  large  loans, 
though  sometimes  proper,  are  generally  injudicious,  and  frequently 
unsafe,  for  large  borrowers  are  apt  to  dictate  their  own  terms  as 
regards  payment ;  and  when  this  is  the  relation  between  a  bank  and 
its  customer,  the  former  is  pretty  sure  to  be  the  sufferer. 

Every  dollar  of  depositors'  money  loaned  by  a  bank  is  owed  for, 
and  its  managers  are  therefore  under  the  strongest  obligations  to 
its  creditors  as  well  as  to  stockholders  to  keep  its  discounts  under 
their  own  control. 

Capital. — ^The  capital  of  a  bank  should  be  a  reality,  not  a  fiction, 
and  it  should  be  owned  by  those  who  have  money  to  lend  and  not 
by  borrowers.  No  bank  can  have  a  prosperous  career  if  its  stock- 
holders take  out  in  loans  the  money  they  have  put  in  as  capital, 
for  such  a  bank,  being  rendered  unable  to  accommodate  the  busi- 
ness public  outside  of  its  owners,  deprives  itself  of  one  of  the  princi- 
pal means  of  success. 

Surplus  Fund. — It  should  be  the  chief  aim  of  bank  managers  to 
make  their  respective  institutions  strong,  and  to  keep  them  free  from 
unavailable  and  undesirable  assets.  Not  only  should  the  capital  be 
kept  unimpaired,  but  a  surplus  fund  should  be  created  from  the 
earnings  that  will  be  a  protection  to  the  capital  and  to  creditors  in 
the  trying  times  that  sooner  or  later  overtake  all  banking  institu- 
tions. There  are  few  items,  if  any,  that  look  better  upon  a  balance 
sheet  of  a  bank  than  a  large  surplus,  and  none  so  well  calcu- 
lated to  secure  for  it  public  confidence;  it  is,  therefore,  on  all 
accounts  the  best  policy  to  accumulate  such  a  fund  as  rapidly  as 
possible,  even  if  dividends  to  stockholders  have  to  be  kept  down  to 
a  low  rate  for  a  time.  The  wisdom  of  this  is  seen  in  the  provision 
of  the  Bank  Act  for  the  accumulation  of  and  maintaining  a  surplus 
of  at  least  fifty  per  cent,  of  the  capital  of  the  bank. 

Keports. — The  instructions  given  by  the  Comptroller  of  the  Cur- 
rency in  regard  to  reports  to  be  made  to  his  office  should  be  very 
closely  followed ;  the  blanks  furnished  by  the  Comptroller  state  very 
explicitly  what  is  required,  but  very  frequently  reports  are  found 
by  him  to  be  incomplete,  necessitating  much  correspondence.  This 
may  be  avoided  by  verifying  the  reports  before  forwarding. 


244 

Stock  Certificates. — The  greatest  care  should  be  exercised  in  re- 
gard to  stock  certificates  and  transfers,  and  when  new  certificates 
are  issued  to  see  that  those  in  lieu  of  which  they  are  given  are 
promptly  surrendered  and  cancelled. 

Collaterals. — The  stocks,  bonds,  etc.,  held  by  banks  as  collateral 
security,  should  be  regarded  as  special  trusts,  and  hence  carefully 
recorded  and  placed  in  the  bank's  vaults,  where  only  the  officer 
entrusted  with  their  care  can  have  access  to  them. 

Bank  Eecords. — In  all  corporate  bodies  the  recording  and  care- 
ful preservation  of  the  record  of  proceedings  of  all  meetings  held  is 
of  the  utmost  importance. 

Have  the  organization  papers  executed  in  duplicate  and  one  set 
incorporated  in  the  minute-book  as  part  of  the  record  of  action 
taken.  Also  have  the  proceedings  of  stockholders  in  the  first  elec- 
tion of  directors  fully  recorded,  so  that  there  may  be  in  permanent 
form  a  complete  history  of  the  organization  of  the  bank. 

The  by-laws  and  all  proceedings  at  meetings  of  directors  and  of 
stockholders  should  also  be  recorded  in  the  minute-book.  These 
records  should  very  explicitly  set  forth  the  appointment  of  the 
judges  of  election  for  directors,  and  the  returns  of  the  judges,  and 
the  fact  that  the  directors  qualified  by  taking  the  prescribed  oath. 
The  recording  of  this  fact  is  too  often  omitted.  The  importance  of 
it  is  evident  as  showing  that  the  directors  qualified  as  required 
before  transacting  any  business.  The  appointment  of  officers  should 
also  be  recorded,  bonds  required  of  them,  and  the  bonds  approved 
by  the  directors;  in  short,  all  matters  pertaining  to  the  organiza- 
tion of  the  bank,  and  the  subsequent  proceedings  of  the  directors 
in  the  supervision  and  management  of  its  affairs  clearly  and  fully 
set  out  in  the  records. 

U.  S.  Treasurier's  Receipt. — This  receipt  for  U.  S.  bonds  de- 
posited by  the  bank  with  the  Treasurer  should  be  kept  where  readily 
available.  Banks  frequently  are  unable  to  find  it  when  required  by 
the  Treasurer  in  the  withdrawal  of  bonds.  In  case  of  loss  a  dupli- 
cate may  be  issued  on  affidavit  that  after  diligent  search  the 
original  cannot  be  found  and  will  be  surrendered  if  found,  and  such 
affidavit  will  be  accepted  for  withdrawal  of  bonds  in  lieu  of  the 
Treasurer's  receipt. 


245 

Certificates  of  TT.  S.  Bond  Examinations. — The  certificate  of  the 
annual  examination  made  by  the  agent  of  the  bank,  of  the  U.  S. 
bonds  of  the  bank  on  deposit  with  the  Treasurer  is  generally  called 
for  by  the  Bank  Examiner,  and  therefore  should  be  kept  where  it 
can  be  readily  produced. 

In  Conclusion. — It  should  be  remembered  that  integrity,  force, 
ability,  faithfulness,  promptness,  carefulness  and  courtesy  tell  in 
banking,  as  well  as  in  any  other  business.  On  the  other  hand,  traits 
and  conduct  of  the  opposite  character  insure  failure,  but,  given  the 
better  qualities  in  good  measure  in  officers  and  clerks,  success  is 
assured.  One  specially  important  thing  to  bear  in  mind  in  banking 
is  that  new  phases  of  business  are  contantly  developing,  and  the 
most  successful  and  most  useful  bank  is  the  one  which  most  quickly 
adapts  itself  to  the  times. 

Do  a  straightforward,  legitimate  and  upright  business,  and  never 
be  tempted  by  the  prospect  of  large  gains  to  engage  in  operations 
not  sanctioned  by  prudence,  or  by  the  provisions  of  the  laws  govern- 
ing National  banks. 


VOLTJNTARY  IIQTJIDATION. 

The  closing  of  the  business  of  a  National  bank  is  either  by- 
voluntary  liquidation  or  involuntarily  by  appointment  of  a  Ke- 
ceiver. 

The  closing  by  Eeceivership  is  treated  fully  in  the  first  part 
of  this  work  under  the  section  of  the  Revised  Statutes  pertaining  to 
Receivership. 

Voluntary  Liquidation  may  be  for  various  purposes:  an  Asso- 
ciation may  for  some  reason  wish  to  discontinue  business  before 
its  charter  expires,  or  on  expiration  of  its  charter,  without  renew- 
ing. In  either  case  the  object  may  be :  To  close  business ;  To  sell 
the  business;  To  reorganize  as  a  new  association,  or  to  consoli- 
date with  one  or  more  other  associations. 

The  procedure  of  liquidation,  for  whatever  purpose,  is  prac- 
tically the  same,  but  as  there  are  certain  points  to  be  noted  ac- 
cording to  the  particular  object  in  view,  the  subjects  will  be  treated 
to  some  extent  separately.  * 

IiaTJIDATION  TO  DISCONTINUE  BUSINESS. 

Authority. — The  law  authorizes  any  National  bank  to  go  into 
liquidation  by  a  vote  of  its  shareholders  owning  two-thirds  of  its 
stock.  (Revised  Statutes,  5220.)  Nothing  is  said  in  the  statute 
about  the  consent  of  the  Comptroller  of  the  Currency,  but  it  will 
be  found  to  facilitate  the  proceedings  to  give  him  notice  in  advance, 
that  he  may  cause  an  examination  of  the  bank  to  be  made  if  he 
deems  it  necessary ;  for  until  he  is  satisfied  that  the  bank  is  solvent, 
he  will  not  consent  to  the  withdrawal  of  the  bonds  of  the  bank 
deposited  with  the  U.  S.  Treasurer,  and,  although  a  vote  may  have 
been  taken  to  place  the  bank  in  liquidation,  the  Comptroller  still 
has  authority  to  appoint  a  receiver  should  he  consider  such  action 
called  for. 

Procedure. — By  implication.  Section  5144  R.  S.  requires  that  a 
vote  of  the  stockholders  be  taken  at  a  meeting  called  for  the  pur- 
pose in  the  manner  provided  for  in  the  articles  of  association  or 
by-laws.  If  the  articles  are  in  the  usual  form  this  may  be  done  by 
publishing  notice  of  the  meeting  for  thirty  days  in  a  newspaper 

246 


247 

published  in  the  town,  city  or  county  where  the  bank  is  located, 
or  by  mailing  to  each  shareholder  notice  in  writing  thirty  days 
before  the  time  fixed  for  the  meeting.  The  notice  should  expressly 
state  that  the  purpose  of  the  meeting  is  to  consider,  and  to  vote 
upon,  the  question  of  placing  the  bank  in  liquidation.  It  is 
necessary  that  shareholders  owning  at  least  two-thirds  of  the  stock 
vote  in  favor  of  the  liquidation;  the  shareholders  may  vote  by 
proxy  at  this,  as  well  as  at  other  meetings,  but  a  director,  other 
oflBcer,  clerk,  teller  or  bookkeeper  of  the  bank  is  prohibited  by  law 
from  acting  as  such  proxy. 

The  shareholders  should  incorporate  in  the  resolution  for  liqui- 
dation a  provision  either  that  liquidation  shall  begin  immediately 
on  the  day  the  vote  is  taken,  or  at  a  determined  future  date. 

FoEM  OF  Resolution. 

Resolved,  That  The  National  Bank  be  placed  in  voluntary 

liquidation  under  the  provisions  of  sections  5220  and  5221,  United 
States  Revised  Statutes,  to  take  effect ,  19 — . 

If  desired  there  may  be  prefixed  to  the  resolution  such  recital  of 
the  reasons  for  the  action  of  the  shareholders  as  may  be  deemed 
appropriate. 

Certifying  to  the  Comptroller. — The  evidence  to  be  furnished 
to  the  Comptroller  of  the  Currency  of  the  fact  of  liquidation  is  a 
copy  of  the  resolution  of  the  shareholders;  a  certificate  of  the 
cashier  or  president,  under  seal  of  the  bank,  that  shareholders  own- 
ing two-thirds  of  the  stock  have  voted  to  place  the  bank  in  liquida- 
tion, and  a  copy  of  the  notice  calling  the  meeting,  showing  date  of 
mailing  or  publication. 

Notice  to  Creditors. — Notice  to  note-holders  and  other  creditors 
to  present  their  claims  for  payment  should  be  published,  as  re- 
quired by  Section  5221  of  the  Kevised  Statutes,  for  a  period  of 
two  months  in  a  newspaper  published  in  the  city  of  New  York,  and 
also  in  a  newspaper  published  in  the  city  or  town  in  which  the 
bank  is  located.  Notice  in  a  weekly  paper  or  in  a  weekly  edition 
of  a  daily  paper  is  suflBcient. 


>    248 

Witlidrawal  of  Bonds. — The  bonds  can  be  withdrawn  as  soon 
as  the  liquidation  begins,  provided  the  Comptroller  of  the  Cur- 
rency is  satisfied  that  the  bank  is  solvent,  but  the  bank  must  first 
deposit  with  the  Treasurer  of  the  United  States  sufficient  lawful 
money  to  retire  all  its  outstanding  circulating  notes,  and  pay  any 
tax  due  on  circulation  and  charges  for  redemptions  over  the  amount 
to  the  credit  of  the  bank  in  the  five  per  cent,  redemption  fund. 
Ordinarily,  the  five  per  cent,  fund  is  ample  to  meet  the  tax  and 
charges.  In  case  thil  fund  is  more  than  sufficient  or  an  excessive 
amount  is  deposited,  the  excess  will  be  returned  to  the  depositing 
bank.  This  deposit  must  be  made  within  six  months  from  date  of 
going  into  liquidation.     (Sec.  5222  E.  S.) 

No  New  Business. — When  the  bank  has  been  placed  in  liquida- 
tion it  can  not  transact  any  new  business  and  the  power  of  its  officers 
to  bind  the  shareholders  is  only  that  which  results  by  implication 
from  the  duty  to  wind  up  and  close  its  affairs.  (Richmond  v.  Irons, 
121  U.  S.,  27;  Schroder  v.  Manufacturers'  N'ational  Bank,  133  U. 
S.,  67.) 

The  following  is  the  form  of  resolution  for  liquidation  and  cer- 
tification of  vote  to  the  Comptroller  of  the  Currency  and  notice  to  be 
published,  also  form  of  oath  of  publisher.  These  forms  are  fur- 
nished by  the  Comptroller. 

Resolution  foe  Voluntabt  Liquidation. 

The National Bank  of ^ ,  19—. 

Charter  No.  . 

At  a  meeting  of  the  shareholders  of  the National Bank 

of ,  held  on ,  19 — ,  thirty  days'  notice  of  the  proposed  busi- 
ness having  been  given,  at  which  shareholders  were  present,  in 

person,  and  by  proxy,  representing  shares  of  the  stock  of 

this  association,  it  was — 

Resolved,  That  "The  National  Bank"  be  placed   in 

voluntary  liquidation,  under  the  provisions  of  sections  5220  and  5221, 
United  States  Revised  Statutes,  to  take  effect ,  19 — . 

The  above  resolution  was  adopted  by  the  following  vote,  representing 
two-thirds  of  the  capital  stock  of  the  association  : 


Names  of  Shareholders. 

Kesidbncb. 

Name  of  Proxy. 

No.  of 
Shares. 

249 


Stock  Voted  Against  Resolution. 


Names  of  Shareholders. 

Besioengb. 

Name  of  Proxy. 

No.  of 
Shares. 

Stock  Not  Repbesented  at  Meeting. 

Names  of  Shareholders. 

Besidbncb. 

No.  of  Shares. 

Total  number  of  shares  voted  in  favor  of  the  resolution  . 
Total  number  of  shares  voted  against  the  resolution  . . . 

Total  number  of  shares  represented  at  the  meeting 

Total  number  of  shares  not  represented  at  the  meeting 
Total  number  of  shares  of  capital  stock 


I  hereby  certify  that  the  foregoing  is  a  true  and  correct  report  of  the 
vote  and  of  the  resolution  adopted  at  a  meeting  of  the  shareholders  of 

this  bank  held  on ,  19 — . 

[  seal  of  bank.] ,  President  or  Cashier. 

Subscribed  and  sworn  to  before  me,  this day  of ,  A.  D.  19 — . 


[  seal  or  NOTAEY.] 


-,  Notary  Public. 


The  following  is  the  form  of  notice  to  be  published  for  a  period  of 
two  months  from  date  on  which  resolution  to  liquidate  takes  effect,  in 
a  New  York  and  local  newspaper  and  publication  in  a  weekly  or  weekly 
edition  of  daily  is  sufficient.  When  publication  has  been  made,  affi- 
davit of  the  publisher  should  be  sent  to  the  Comptroller  of  the  Currency: 


FoEM  OF  Notice. 

The National  Bank ,  located  at ,  in  the  State  of 

,  is  closing  its  affairs.    All  note-holders  and  other  creditors  of 

the  association  are  therefore  hereby  notified  to  present  the  notes  and 
other  claims  for  payment. 


Dated 


-,  19-. 


President  or  Cashier. 


Affidavit  of  Publication. 


State  of 


County  of 


-.} 


ss: 


of 
of 


-,  being  duly  sworn,  deposes  and  says  that  he  is  the  publisher 
-,  a newspaper  published  in  the of ,  county 


18 


State  of 


and  that  the  annexed  advertisement  of  the 


250 

Certificate   for   Voluntary   Liquidation   of   the   National   Bank 

of has  appeared  in  each  issue  of  said  paper  for  a  period  of  at 

least  sixty  days,  beginning  the  day  of  and  ending  the 

day  of ,  190 — . 

Subscribed  and  sworn  to  before  me,  ^  a in  and  for  the 

State  and  County  aforesaid,  this day  of ,  190 — . 

[Seal  of  Officer.] 

Oath  to  be  sent  to  the  Comptroller  with  clipping  of  advertisement. 

liquidating  Agent. — When  a  National  bank  has  been  placed  in 
liquidation,  either  by  vote  of  shareholders  or  as  a  result  of  expira- 
tion of  charter,  the  settlement  of  its  affairs  devolves  by  law  upon 
the  shareholders,  either  through  an  agent  or  committee  specifically 
authorized  by  the  shareholders,  or  in  event  of  such  non-authoriza- 
tion then  through  the  board  of  directors  and  frequently  the  direc- 
tors, by  formal  resolution,  authorize  one  of  their  number  to  act  as 
the  liquidating  agent. 

All  obligations  of  the  bank  become  due  and  payable  when  the 
bank  is  legally  closed,  and  they  should  be  settled  immediately.  The 
assets  remaining  should  be  converted  into  money  as  promptly  as 
possible  and  distribution  made  pro  rata  among  the  shareholders. 

Dividend  Payments. — Where  full  settlements  with  shareholders 
are  not  effected  at  once,  the  amount  of  the  first  dividend  should  be 
entered  on  stock  certificates,  when  presented,  and  endorsements  sub- 
sequently made  as  additional  dividends  are  paid.  When  the  assets 
have  been  fully  paid  to  shareholders  the  certificates  should  be  sur- 
rendered and  cancelled. 

Power  of  Liquidating  Agent. — ^The  liquidating  agent  stands  in 
the  same  relation  to  the  bank  as  do  the  directors  during  its  active 
existence;  that  is,  any  transactions  in  connection  with  the  sale  or 
other  disposition  of  assets,  and  general  transactions  relating  to 
liquidation,  should  be  effected  under  the  name  of  the  association 
by  the  liquidating  agent. 


251 

nQTJIDATING  TO  SELL  BUSINESS  OE  TO  REORGANIZE. 
Procedure. — See  under  Liquidation  to  Discontinue  Business. 

Private  Disposition  of  Assets. — Where  a  bank  is  closed  for  the 
purpose  of  selling  its  business  to  another  bank,  or  in  contemplation 
of  reorganization,  by  the  unanimous  consent  of  shareholders,  all  of 
the  property  of  the  bank  may  be  legally  disposed  of  without  the  for- 
mality of  a  public  sale,  the  claims  of  creditors  having  been  paid  or 
provided  for. 

Shareholders'  Rights. — Shareholders  are  entitled  to  the  full  value 
of  their  stock  in  cash,  and  the  proper  method  of  ascertaining  the 
real  value  of  the  property,  unless  shareholders  representing  the 
stock  are  satisfied  with  the  offer  made,  is  by  public  sale,  upon 
which  they  may  insist. 

Sale  of  Assets  to  New  Bank. — Where  the  directors  representing 
a  majority  of  the  stock  of  the  closed  bank  organize  a  new  bank 
they  are  at  liberty  as  directors  of  the  new  association  to  buy  the 
property  of  the  closed  bank  at  public  sale,  but  have  no  right  to 
buy  it  at  a  private  sale  at  a  price  which  they  may  put  upon  it 
themselves.  Where,  however,  the  price  is  a  fair  one  and  share- 
holders are  allowed  to  participate  in  the  reorganization,  it  is  not 
likely  that  a  court  would  order  a  public  sale,  there  being  no  reason- 
able prospect  of  benefit  from  such  public  sale. 

LIQUIDATION  BY  EXPIRATION  OF  CHARTER. 

Settlement  of  Affairs. — The  settlement  of  the  affairs  of  a  bank 
closed  by  expiration  of  the  corporate  existence  is  the  same  as  though 
the  bank  had  been  placed  in  liquidation  by  vote  of  shareholders 
during  its  legal  life.  Usually  the  board  of  directors  is  kept  up 
to  superintend  the  liquidation,  or  a  liquidating  agent  or  committee 
may  be  appointed  for  the  purpose. 

No  Vote  Necessary. — !N"o  action  on  the  part  of  shareholders  is 
required  to  terminate  the  corporate  existence  of  a  National  bank 
which  has  reached  the  end  of  its  corporate  life  of  twenty  years. 
Expiration  legally  results  from  failure  to  effect  extension. 


252 

Certification  of  Closing  by  Expiration  of  Charter. — Certification 
of  expiration  of  a  bank's  corporate  existence  must  be  made  to  the 
Comptroller  of  the  Currency,  under  seal  of  the  association,  by  the 
President  or  Cashier,  and  notice  to  creditors  that  the  association  is 
closing  published  in  a  New  York  and  local  newspaper  for  a  period 
of  two  months  from  the  date  of  expiration  of  charter.  Notice 
may  be  in  a  weekly  paper  or  a  weekly  edition  of  a  daily. 

FoBM  OF  Ceetification. 

To  the  COMPTBOLLEB  OF  THE  CUBEENCY, 

Washington,  D.  C: 

It  is  hereby  certified,  in  pursuance  of  sections  5220  and  5221  of  the 
Revised  Statutes  of  the  United  States,  that  the  corporate  existence  of 

"  The ,"  located  at ,  in  the  State  of ,  having  expired 

at  close  of  business  on  the day  of ,  19 — ,  the  bank  is  now 

closing  its  affairs  under  the  provisions  of  section  7  of  the  act  of 
July  12,  1882. 

In  testimony  whereof  I  have,  by  instruction  of  the  Board  of 
Directors  of  said  association,  h-ereto  subscribed  my  name  and  affixed 

the  seal  of  said  association  at ,  aforesaid,  the  day  and  year  above 

written.  , 

[seal  of  the  bank.]  President  or  Cashier. 

Notice  to  Cbeditobs. 

The National  Bank ,  located  at ,  in  the  State  of 

,  is  closing  up  its  affairs,  its  corporate  existence  having  expired 


at  close  of  business  on  the day  of ,  19 — .    All  note-holders 

and  others,  creditors  of  said  association,  are  therefore  hereby  notified  to 
present  the  notes  and  other  claims  against  the  association  for  payment. 


Dated  ,  19 — ,  President  or  Cashier. 

Note. — An  affidavit  of  the  publisher  that  the  required  publication 
has  been  made  with  a  clipping,  containing  notice  from  one  issue  of 
each  paper  should  be  sent  to  the  Comptroller  of  the  Currency.  See 
form  of  Affidavit  under  Liquidation. 

Withdrawal  of  Bonds, — ^Bonds  on  deposit  to  secure  circulation 
may  be  withdrawn  at  any  time  within  six  months  of  the  date  of 
expiration  by  depositing  lawful  money  for  the  redemption  of  out- 
standing notes  of  the  bank. 


.253 

« 

Extension  to  Liquidate. — The  corporate  existence  of  a  National 
bank  the  charter  of  which  has  expired  by  limitation  is  extended  by 
Act  of  July  12,  1882,  for  the  purpose  of  effecting  liquidation  and 
only  for  that  purpose. 

naUIDATION  FOR  CONSOUDATION. 

Authority. — The  only  reference  in  the  Bank  Act  to  the  consoli- 
dation of  National  banking  associations  is  that  contained  in  Section 
5223,  U.  S.  E.  S.^  which  is  to  the  effect  that  an  association  which 
is  in  good  faith  winding  up  its  business  for  the  purpose  of  consoli- 
dating with  another  association  shall  not  be  required  to  deposit 
money  for  its  outstanding  circulation,  but  that  its  assets  and  lia- 
bilities shall  be  reported  by  the  association  with  which  it  is  in 
progress  of  consolidation. 

By  implication  this  provision  would  appear  to  authorize  the 
assignment  of  bonds  on  deposit  with  the  Treasurer  of  the  United 
States  to  secure  the  circulation  of  the  liquidating  bank  to  the 
absorbing  association,  and  to  require  the  maintenance  of  a  redemp- 
tion fund  for  outstanding  issues  of  the  bank  which  has  gone  into 
liquidation.  With  the  redemption  of  circulation  of  the  closed 
bank  would  follow  the  issue  of  a  like  amount  of  notes  of  the  ab- 
sorbing association.  As  a  matter  of  fact,  this  permissive  feature 
has  rarely  been  availed  of,  as  it  has  been  found  more  advantageous 
to  deposit  lawful  money  to  redeem  the  notes  of  the  liquidated  bank 
and  to  simultaneously  issue  new  notes  of  the  absorbing  association 
on  the  additional  bonds  assigned.  In  the  event,  however,  that  the 
banks  in  interest  desire  to  pursue  the  course  authorized  by  Section 
5223,  upon  filing  documentary  evidence  with  the  Comptroller  of 
the  Currency  that  the  absorbing  association  has  assumed  all  the 
liabilities,  including  circulation  of  the  liquidating  bank,  the  Treas- 
urer of  the  United  States,  upon  proper  authority  from  the  board 
of  directors  of  the  latter  association,  will  assign  and  transfer  bonds 
on  deposit  to  secure  such  circulation  to  the  continuing  association. 

Forms  of  resolutions  relating  to  assumption  of  liabilities  of  a 
liquidated  association,  and  transfer  of  bonds  on  deposit  to  secure 
circulation,  to  be  executed  and  filed  with  the  Comptroller  of  the 
Currency,  are  as  follows : 


254 

Resolution  Assuming  the  Liabilities  of  an  Association  Placed  in 
Liquidation  fob  Pubpose  of  Consolidation. 

I,  ,  cashier  of  the  National   Bank  of  ,  hereby 

certify  that  at  a  meeting  of  the  Board  of  Directors  of  said  association, 

held  on  the day  of ,  a  resolution  was  adopted  relative  to 

the  consolidation  of  the National  Bank  of with  the  asso- 
ciation first  mentioned,  under  section  5223  of  the  Revised  Statutes  of 
the  United  States,  which  resolution  is  in  the  words  following  : 

"Resolved,  That  this  association  as  a  part  of  the  consideration  for 
the  purchase  of  all  the  assets  of  the National  Bank  of  


* 


does  hereby  assume  all  the  liabilities  of  said  National  Bank  of 

,  Including  the  redemption  of  its  circulating  notes." 

And,  in  pursuance  of  said  resolution,  the  National  Bank  of 

has  acquired  all  of  the  assets  of  the  said National  Bank 


of  ,  and  assumed  a^l  its  liabilities,  including  the  redemption  of 

its  circulating  notes,  the  association  last  mentioned  having  been  placed 
in  voluntary  liquidation  in  conformity  with  the  provisions  of  sections 
5220  and  5221  of  the  United  States  Revised  Statutes  for  the  purpose  of 

consolidation.  , 

[seal.]  Cashier  and  Secretary  of  the  Board  of  Directors. 

Resolution  Authoeizing  Withdbawal  and  Assignment  of  Bonds  as  a 

Result  of  Consolidation. 

At  a  meeting  of  the  Board  of  Directors  of ,  held  at  its  banking 

house  on ,  the  following  resolution  was  adopted  : 

Resolved,  That  the  Comptroller  of  the  Currency  be,  and  he  is  here- 
by authorized  to  withdraw  $ ,  U.   S.  bonds,  deposited  with  the 

Treasurer  of  the  United  States  by  this  bank  to  secure  circulation,  and 
described  as  follows  : 

$ per  cent,  of  the  loan  of ,  and  that  the  Treasurer 

U.  S.  be,  and  is  hereby  authorized  to  assign  and   transfer  the  same 

to  said  Treasurer  in  trust  for  ,  which  association  assumes  the 

liabilities  of  the  said  ,  including  the  redemption  of  its  circulat- 
ing notes. 

I  certify  that  the  above  is  a  true  extract  from  the  minutes  of  said 
meeting.  , 

[seal  of  bank.]  Cashier  and  Secretary  of  Board  of  Directors. 

Note. — The  Treasurer's  receipts  for  the  bonds  proposed  to  be  with- 
drawn must  be  forwarded,  with  this  form  properly  flljed,  to  the  Comp- 
troller of  the  Currency. 

Riglits  of  Shareholders. — No  rights  exist,  or  are  conferred  by 
law,  upon  the  shareholders  of  a  liquidating  association  as  share- 
holders of  the  bank  with  which  its  business  is  being  consolidated. 


255 

nor  can  such  shareholders  become  shareholders  of  the  absorbing 
bank,  except  through  the  voluntary  action  of  shareholders  of  the 
latter. 

Increase  of  Capital  and  Allotment  of  Stock. — Assuming  that 
shareholders  of  the  liquidated  bank  are  to  become  shareholders  of 
the  continuing  association,  it  becomes  necessary  for  the  shareholders 
of  the  latter  association  to  increase  the  capital  stock  to  the  requisite 
amount  .in  conformity  with  the  provisions  of  the  Act  of  May  1, 
1886,  and  to  waive  their  right  to  participate  in  the  increase  in  order 
that  the  stock  can  be  sold  to  shareholders  of  the  closed  association. 
The  right  to  participate  in  an  increase  in  the  capital  stock  of  a 
bank  exists  at  common  law  and  is  generally  written  anto  the  articles 
of  National  banking  associations.  Waiver  of  that  right  is  essential  I 
to  enable  the  stock  to  be  sold  to  others. 

Assumption  of  Liabilities. — When  shareholders  of  the  continuing 
bank  have  effected  an  increase  in  capital,  and  authorized  the  sale  of 
the  stock  to  shareholders  of  the  liquidated  bank,  the  directors  of  the 
former  may  contract  with  the  directors  or  liquidating  agent  of  the 
closed  association  for  the  assumption  of  liabilities  to  depositors  and 
other  creditors,  on  transfer  of  an  equivalent  amount  of  assets,  and 
for  the  purchase  of  assets  representing  shareholders'  interests,  to 
enable  shareholders,  with  the  proceeds,  to  pay  for  stock  to  be  issued 
to  them. 

Payment  for  Stock. — It  is  not  regarded  as  essential  that  the 
payment  for  such  assets  should  be  made  in  actual  money,  as  a 
check  (cashier's)  or  draft  will  answer  the  purpose  as  constituting 
a  demand  obligation,  to  be  satisfied  either  in  cash  or  in  stock  to  be 
issued  to  the  shareholders  as  a  result  of  the  contemplated  con- 
solidation. 

Pnrchasingf  Assets  of  liqnidating  Bank. — Where  consolidation  is 
effected  without  making  provision  for  shareholders  of  the  liquidated 
bank  by  increasing  the  capital  of  the  continuing  association,  the 
consolidation  resolves  itself  into  a  mere  purchase  of  the  business 
of  the  closed  bank  which  may  carr}-  with  it  an  assumption  of  liabili- 
ties to  depositors  and  other  creditors,  offsetting  an   equivalent 


256 

amount  of  assets  transferred,  and  the  payment  in  cash  of  the 
liquidating  value  of  assets  representing  shareholders^  interests.  A 
contract  of  that  character  may  be  entered  into  between  the  absorb- 
ing bank  and  the  directors  or  liquidating  agent  of  the  closed  asso- 
ciation. 

Liquidating  Two  or  More  Banks  for  Consolidation. — In  some 
instances,  where  consolidation  of  business  only  is  deemed  advisable, 
it  has  been  found  preferable  to  place  the  associations  interested  in 
voluntary  liquidation  in  conformity  with  the  provisions  of  Section 
5220  of  the  Revised  Statutes,  and  organize  a  new  bank.  When 
the  capital  stock  has  been  paid  in,  as  required  by  law,  the  asso- 
ciation may  acquire  the  business  of  the  liquidated  banks  in  the 
manner  hereinbefore  outlined.  This  course  is  frequently  found 
advisable  where  it  is  desired  to  effect  a  change  in  the  personnel 
of  the  shareholders  and  to  start  business  with  a  "clean  sheet.'' 
Assets  of  the  closed  banks,  not  purchased  by  the  new  association, 
are  ordinarily  placed  in  charge  of  liquidating  agents  for  collection 
and  pro  rata  distribution  to  shareholders  of  record  at  date  of 
liquidation. 


EXTENSION  OF  COEPORATE  EXISTENCE. 

Provision  for  Extension. — The  Act  of  Congress  approved  July 
12,  1882,  provided  that  any  National  banking  association,  at  any 
time  within  the  two  years  next  previous  to  the  date  of  the  expiration 
of  its  corporate  existence  under  present  law,  and  with  the  approval 
of  the  Comptroller  of  the  Currency,  may  extend  its  period  of  suc- 
cession, by  amending  its  articles  of  association,  for  a  term  of  not 
more  than  twenty  years. 

The  Act  of  Congress  approved  April  12,  1902,  authorizes  the 
Comptroller  of  the  Currency  in  the  manner  provided  by,  and  under 
the  conditions  and  limitations  of  the  Act  of  eJuly  12,  1882,  to  extend 
for  a  further  period  of  twenty  years  the  charter  of  any  National 
banking  association  extended  under  said  act  which  shall  desire  to 
continue  its  existence  after  the  expiration  of  its  charter. 

The  course  of  procedure,  on  the  part  of  an  association,  in  effect- 
ing a  second  extension  of  charter  is  the  same  as  in  the  case  of  a 
first  extension. 

Date  of  Expiration  of  Old  Charter. — The  date  of  expiration  of 
the  old  charter  is  determined  by  the  date  of  execution  of  the  organi- 
zation certificate,  as  Section  5136  of  the  Eevised  Statutes  provides 
that  all  associations  organized  under  it  shall  have  succession  for 
twenty  years  from  the  date  of  the  execution  of  the  organization 
certificate.  If  the  paper  is  lost,  or  the  date  in  any  way  uncertain, 
information  can  be  obtained  on  application  to  the  Comptroller  of 
the  Currency. 

Application  for  Extension. — Under  the  Act  of  July  12,  1882, 
and  the  regulations  of  the  Comptroller's  ofiice,  banks  are  permitted 
to  file  their  application  for  extension  with  the  proper  papers  at  any 
time  within  two  years  prior  to  their  expiration ;  but  usually  applica- 
tion for  extension  is  not  made  until  within  a  few  months  prior  to 
expiration  of  charter,  and  this  gives  the  Comptroller  sufficient  time 
to  satisfy  himself  as  to  the  condition  of  the  bank,  and  upon  re- 
quest the  necessary  blanks  will  be  sent  from  that  office. 

The  following  are  the  forms  furnished  by  the  Comptroller: 

^57 


258 


Amendment  of  Abticles  of  Association. 

In  accordance  with  and  in  pursuance  of  the  provisions  of  "An  act 
to  enable  National  Banking  Associations  to  extend  their  corporate 
existence,   and   for  other  purposes,"   approved   July   12,   1882,  or  any 

amendment  thereof,  we,  the  undersigned,  shareholders  of  "  The /* 

located  at ,  in  the  County  of and  State  of ,  owning 

the  number  of  shares  of  the  capital  stock  of  said  association  set  op- 
posite our  respective  names,  aggregating  not  less  than  two-thirds  of  the 

stock  of  said  association,  do  hereby  consent  and  agree  that  the 

article  of  the  Articles  of  Association  of  said  National  Banking  Associa- 
tion be,  and  is  hereby,  amended  to  read  as  follows  : 

"  This  association  shall  continue  until  close  of  business  on  , 

19 — ,  unless  sooner  placed  in  voluntary  liquidation  by  the  act  of  its 
shareholders  owning  at  least  two-thirds  of  its  stock,  or  otherwise  dis- 
solved by  authority  of  law." 

In  witness  whereof,  we,  the  undersigned,  have  hereto  set  our  hands. 


Date  of 
Signing. 


Signature  of 
Shareholder. 


Address. 


Signature  of 
Proxy. 


No.  of 
Shares. 


Certificate  to  the  Comptbolleb. 


-,  19—. 


To  the  Comptbolleb  of  the  Cubbency, 

Washington,  D.  C: 

Sib  :  In  pursuance  of  the  provisions  of  "  An  act  to  enable  National 
Banking  Associations  to  extend  their  corporate  existence,  and  for  other 
purposes,"  approved  July  12,  1882,  or  any  amendment  of  said  act,  I 
hereby  certify  that  shareholders  owning  not  less  than  two-thirds  of  the 
•capital  stock  of  "  The ,"  have  consented  in  writing  to  the  exten- 
sion of  the  charter  of  said  association;  that  the  signatures  to  the  at- 
tached amendment  of  the  Articles  of  Association,  executed  in  dupli- 
cate, are  the  true  and  correct  signatures  of  said  shareholders,  or  of 
their  lawfully  appointed  attorneys,  and  that  one  of  the  instruments, 
in  all  respects  like  the  other,  is  on  file  in  the  bank. 

The  foregoing  certificate  is  made  under  seal  of  the  association  in  ac- 
cordance with  a  resolution  of  the  Board  of  Directors  adopted  at  a 

meeting  held  on  the day  of ,  190 — ,  in  which  the  president, 

or  cashier,  was  also  authorized  to  make  an  application  for  the  approval 
of  the  amended  Articles  of  Association,  a  copy  of  which  resolution  has 
been  recorded  on  the  minute  book  of  the  bank. 


[seal  of  the  bank.]  President  or  Cashier. 

(The  above  certificate  should  not  be  made  prior  to  date  on  which 
the  aiBPiuiiiigjoJ;  is  last  signed.) 


259 

Request   fob  Approval. 

The  Comptroller  of  the  Currency  is  hereby  requested  to  approve  the 
foregoing  amendment  of  the  Articles  of  Association  of  said  bank,  ex- 
tending its  corporate  existence  for  twenty  years,  pursuant  to  the  act 
of  Congress  entitled  "  An  act  to  enable  National  Banking  Associations 
to  extend  their  corporate  existence,  and  for  other  purposes,"  approved 
July  12,  1882,  or  any  amendment  of  said  act. 


[SEAL  OF  THE  BANK.]  President  or  Cashier. 

Consent  of  Shareholders. — The  law  does  not  provide  that  a  meet- 
ing of  the  shareholders  shall  be  held,  as  it  is  necessary  only  to 
secure  the  written  consent  of  those  representing  two-thirds  of  the 
stock,  and  this  may  be  done  by  sending  in  advance  to  shareholders  at 
a  distance  a  power  of  attorney  to  be  signed  and  returned,  any 
person  competent  being  empowered  to  act  as  attorney.  The  follow- 
ing form  may  be  used  for  this  purpose : 

PowEB  OF  Attorney. 

Know  all  men  by  these  pbesents  : 

That  I,  ',  of ,  hereby  constitute  and  appoint  irrevocably 

my  true  and  lawful  attorney,  for  me  and  in  my  name  and  stead 

to  sign  all  necessary  papers  in  connection  with  the  extension  of  the 

corporate  existence  of  the ,  under  the  act  of  Congress  approved 

July  12,  1882,  or  any  amendment  thereof,  and  I  hereby  consent  that  the 

article   of   the  Articles   of  Association   of   The  be   so 

amended  as  to  read  as  follows: 

"  This  association  shall  continue  until  close  of  business  on  , 

unless  sooner  placed  in  voluntary  liquidation  by  the  act  of  its  share- 
holders owning  at  least  two-thirds  of  its  stock,  or  otherwise  dissolved 
by  authority  of  law." 

Hereby  granting  unto  my  said  attorney  full  power  and  authority  to 
act  in  and  concerning  the  premises  as  fully  and  effectually  as  I  might 
do  if  personally  present. 

In  witness  whereof  I  have  hereunto  set  my  hand  and  seal  this 

day  of ,  in  the  year  190 — .  ^ 

Signed  and  sealed  in  presence  of . 

Authority  of  Repbesentative  of  Otheb  Corpobation   Consenting  to 
Extension  Cobpobate  Existence  of  National  Bank. 

,  190—. 

At  a  meeting  of  the  of  the  of < — ,  held  on  the 

day  of • — ,  190 — ,  it  was 


Voted,  That be,  and  he  is  hereby,  appointed  irrevocably  as  its 

attorney,  with  power  of  substitution,  to  consent  to  and  sign,  in  its 


260 

behalf,  the  amendment  of  the article  of  the  Articles  of  Associa- 
tion of  The National Bank ,  said  amendment  read- 
ing as  follows: 

"  This  Association  shall  continue  until  close  of  business  on  , 

unless  sooner  placed  in  voluntary  liquidation  by  the  act  of  its  share- 
holders owning  at  least  two-thirds  of  its  stock,  or  otherwise  dissolved 
by  authority  of  law." 

A  true  copy  from  the  records. 

Attest : 

#  [AFFIX   SEAL.] 

These  powers  of  attorney,  signed  by  the  shareholders,  should  not 
be  sent  to  the  Comptroller  with  the  amendment  to  the  articles  of 
association,  but  retained  in  the  files  of  the  bank. 

If  preferred,  a  shareholders'  meeting  may  be  called  for  a  con- 
venient date  to  enable  the  shareholders  to  sign  the  necessary  papers. 

Notice  of  the  meeting  may  be  sent  by  mail  to  each  shareholder, 
or  given  by  publication.  At  this  meeting  the  shareholders  may 
appear  in  person  or  by  attorney,  the  power  given  to  the  latter  being 
similar  in  form  to  that  inserted  above. 

Certificate  of  President  or  Cashier. — The  certificate  of  the 
president  or  cashier  that  shareholders  owning  two-thirds  of  the 
stock  have  consented  in  writing  to  the  extension  and  the  request 
for  approval  should  be  executed,  and  transmitted  to  the  Comp- 
troller, at  least  two  months  previous  to  the  expiration  of  the  cor- 
porate existence  of  the  bank,  in  order  that  the  Comptroller  may 
have  sufficient  time  to  cause  the  special  examination  to  be  made,  as 
required  by  Section  3  of  the  Act  of  July  12,  1882,  and  to  enable  the 
bank  to  comply  with  possible  conditions  before  the  time  for  renewal 
of  charter. 

Anthority  to  Sign. — If  any  shares  of  the  bank  stand  in  the 
name  of  administrators,  executors,  trustees,  or  guardians,  and  it 
becomes  necessary  to  have  the  consent  of  the  owners  of  these  shares 
to  make  up  the  majority  required  to  authorize  the  amendment,  duly 
certified  copies  of  the  legal  appointment  of  such  administrators, 
executors,  trustees,  or  guardians  should  be  obtained  and  filed  with 
the  bank's  records  relating  to  the  extension. 

When  stock  stands  in  the  name  of  an  assignee,  who  signs  the 
amendment^  there  must  be  evidence  showing  that  the  shares  of  stock 


261 

have  been  regularly  transferred  to  him,  as  such  assignee,  on  the 
books  of  the  bank.  When  the  amendment  is  signed  by  an  attorney 
acting  for  shareholders,  properly  executed  power  of  attorney  is 
required. 

Certificate  of  Extension. — The  certificate  of  the  Comptroller  ap- 
proving extension  will  be  issued  on  the  date  of  expiration  of  the 
existing  charter. 

Circulating  Notes. — The  law  requires  that  circulating  notes 
issued  to  the  bank  after  the  new  period  of  succession  begins  shall  be 
of  different  devices  from  those  issued  before;  and  this  necessitates 
the  procuring  of  new  plates,  which  are  prepared  at  the  expense  of 
the  bank.  This  expense  will  be  $50  for  a  plate  of  two  impressions 
— $50s  and  $100s— and  $75  for  a  plate  of  four,  viz. :  $10,  $10,  $10, 
$20,  or  $5,  $5,  $5,  $5,  the  cost  being  the  same  as  for  the  original 
plates. 

A  blank  to  enable  banks  to  order  the  preparation  of  plates  for 
the  printing  of  new  circulation  will  be  furnished  by  the  Comp- 
troller, and  the  order  should  be  made  out  and  sent  with  the  exten- 
sion papers  so  that  the  plates  may  be  engraved  and  the  currency 
printed  to  be  ready  when  the  charter  is  renewed. 

The  new  circulating  notes  for  the  full  amount  of  the  bond  deposit 
will  be  issued  to  the  bank  at  date  of  extension  on  deposit  of  lawful 
money  sufficient  to  redeem  its  outstanding  circulation,  or  they  will 
be  issued  as  the  old  notes  come  in  by  the  usual  course  of  redemption, 
until  the  end  of  three  years  from  the  date  of  extension,  when  the 
law  requires  the  bank  to  deposit  lawful  money  for  the  redemption  of 
such  portion  of  the  old  circulation  as  may  then  remain  outstanding ; 
but  the  full  deposit  may  be  made  at  once  or  in  instalments,  or  at  the 
end  of  three  years. 

Bond  Deposit  witli  XT.  S.  Treasurer. — No  transfer  of  bonds  is 
necessary,  as  the  extended  association  is  in  all  respects  identically 
the  same  as  before  extension,  being  placed  in  the  same  position  as 
if  the  law  had  allowed  it  at  the  outset  forty  years  from  the  date  of 
its  organization,  of  which  twenty  have  expired. 


262 

Shareholders  Dissenting  to  Extension. — Section  5  of  the  Act  of 
July  12,  1882,  conserves  the  interest  of  shareholders  not  desiring 
to  continue  their  connection  with  the  bank,  but  desiring  to  with- 
draw and  to  be  paid  the  surrender  value  of  their  stock.  The  act 
provides  that  notice  of  intention  to  w^ithdraw  shall  be  given  to  the 
directors  within  thirty  days  from  the  date  of  issue  of  certificate 
authorizing  extension  of  the  charter,  and  that  a  committee  of  ap- 
praisal shall  be  appointed — one  member  by  the  withdrawing  share- 
holder, one  by  the  bank,  and  a  third  by  the  two.  The  bank  and  the 
dissenting  shareholder  may  select  as  members  of  the  committee 
expert  accountants  or  any  other  persons  competent  to  perform  the 
duties  of  appraisers.  In  case  the  value  fixed  is  unsatisfactory  to 
the  shareholder,  he  may  appeal  to  the  Comptroller  of  the  Currency, 
whose  appraisal  shall  be  final  and  binding.  The  right  of  appeal  is 
not  given  to  the  bank.  In  case  the  valuation  fixed  by  the  Comp- 
troller exceeds  the  amount  fixed  by  the  committee,  the  expense 
of  reappraisal  must  be  borne  by  the  bank ;  otherwise  by  the  share- 
holder appealing.  The  law  makes  no  provision  for  payment  of 
expenses  incident  to  the  first  appraisal ;  hence  it  is  incumbent  upon 
the  withdrawing  shareholder  and  the  bank  to  determine  this  ques- 
tion. The  shares  appraised  and  surrendered  must,  after  due  notice, 
be  sold  at  public  sale  within  thirty  days  after  the  final  appraisal. 

Generally  speaking,  the  market  price  of  stock  represents  the  sur- 
render value,  although,  in  some  instances,  the  market  price  may  be 
above  or  below  the  actual  value  of  the  stock.  The  proper  course  to 
pursue  is  to  have  a  very  careful  examination  made  of  the  assets, 
taking  into  consideration  the  actual  value  of  items  exceeding  the 
book  value,  and  deducting  items  admittedly  worthless.  The  ques- 
tion of  "  good  will "  is  not  to  be  considered,  although  it  may  be  of 
material  value  to  a  bank  continuing  business. 


EEORGANIZATION  VERSUS  EXTE13fSI0N. 

Reorganization  May  be  Preferable  to  Extension. — The  foregoing 
instructions  apply  to  the  extension  of  the  bank  which  legally  con- 
tinues it  in  all  respects  what  it  was  prior  to  extension.    . 

It  may,  however,  be  deemed  best  by  those  principally  interested 
in  the  National  bank  about  to  expire  if  owning  the  controlling  stock 
not  to  avail  themselves  of  the  foregoing  method.  There  are  obvious 
reasons  for  thus.  For  example :  In  a  twenty  years'  life  the  personnel 
of  the  stockholders  of  an  association  undergoes  great  changes.  The 
stock  which  was  originally  in  the  hands  of  active  resident  business 
men,  who  brought  custom  and  business  to  the  bank,  by  various 
vicissitudes  falls  into  the  possession  of  widows,  heirs,  and  non-resi- 
dents, whose  only  interest  in  the  institution  is  to  draw  dividends. 
The  active  stockholders  remaining  in  such  associations  will  doubt- 
less prefer  in  many  instances  to  let  the  old  association  expire,  and, 
with  their  proportion  of  the  capital,  joining  with  themselves  other 
new  capitalists  siuch  as  they  may  think  will  add  strength,  form  a 
new  association  to  occupy  the  place  vacated  by  the  one  which  has 
expired. 

ITame  of  New  Bank. — The  proviso  in  Section  5  of  the  Act  of 
July  12th,  1882,  prevents  the  use  of  the  old  name  for  a  new 
association  unless  all  the  shareholders  in  the  old  bank  are  assigned 
shares  in  the  new  bank  proportionately  to  those  they  held  in  the 
old ;  therefore  unless  for  some  reason  this  is  done  it  will  be  necessary 
to  select  a  title  materially  different  from  that  of  the  expiring  asso- 
ciation, as  the  Comptroller  otherwise  will  not  give  his  approval. 

Procedure. — The  new  associates  should  make  application  to  the 
Comptroller  for  authority  to  organize,  and  upon  receipt  of  advice  of 
approval  and  of  organization  blanks  they  should  execute  articles  of 
association,  organization  certificate,  oath  of  directors,  and  file  these 
papers,  with  an  order  for  circulation,  in  the  office  of  the  Comptroller 
of  the  Currency  about  two  months  prior  to  the  expiration  of  the 
existence  of  the  old  bank.  Fifty  per  cent,  of  the  capital  should  be 
paid  in,  so  as  to  be  certified  to  the  Comptroller  at  the  same  time 
bonds  are  deposited,  and  this  should  be  done  some  time  before  the 
old  bank  expires. 

263 


264 

As  ciTCulating  notes  can  not  be  delivered  under  forty-five  days 
from  date  of  issue  of  certificate  authorizing  the  bank  to  begin  busi- 
ness, it  may  be  found  advisable  to  complete  the  organization  a  suf- 
ficient time  in  advance  of  the  expiration  of  the  charter  of  the  old 
bank  and  opening  of  the  new  to  insure  the  delivery  of  notes  at  that 
time. 

The  shareholders  of  the  new  bank  can  put  into  it  moneys  they 
derive  from  the  old.  The  assets  of  the  old  bank  can  be  sold  in 
such  manner  by  its  directors  as  will  realize  the  most  for  its  share- 
holders, and  generally  it  is  advantageous  to  sell  to  the  new  bank 
all  that  can  be  legally  taken  by  it.  It  cannot  take  any  real 
estate  except  banking  house  nor  real  estate  paper  or  mortgages, 
nor  any  stocks  or  assets  of  any  kind  known  to  be  of  questionable 
value. 

'No  stockholder  of  the  old  bank  can  be  compelled  to  take  stock  in 
the  new  bank.  The  transfer  of  deposits  from  the  old  bank  to  those 
of  the  new  should  be  made  by  check  or  by  agreement  of  new  bank 
to  honor  checks  of  depositors  in  old  bank,  any  depositor  being  at 
liberty  to  withdraw  his  deposit  either  before  or  after  the  change. 

A  set  of  new  books,  of  course,  should  be  opened  by  the  new  asso- 
ciation. 

liqnidation  of  Old  Association. — The  method  of  liquidating  the 
old  bank  which  goes  out  on  expiration  of  charter  is  given  in  the 
chapter  on  Liquidation. 


NATIONAL  BANKS  AS  GOVERNMENT  BEPOSITAEIES. 

Depositaries  for  Government  funds  are  established  in  different 
parts  of  the  country  for  the  convenience  of  the  Government,  and  thus 
serve  also  general  business  interests. 

Prior  to  1840,  the  banks  were  utilized  for  this  purpose;  then  an 
Independent  Sub-Treasury  System  was  established,  and  this  system, 
as  remodeled  in  1846,  is  still  maintained.  In  1864  provision  was 
made  in  the  National  Bank  Act  that  National  banks  might  be  desig- 
nated by  the  Secretary  of  the  Treasury  as  Depositaries  of  Public 
Moneys,  excepting  receipts  for  customs.  (Section  5153,  R.  S.)  The 
exception  of  customs  was  made  on  account  of  gold  being  then  (during 
the  Civil  War)  at  a  premium.  The  Government  having  to  pay  in- 
terest on  the  Public  Debt  in  gold,  all  revenues  payable  in  coin  were 
brought  into  the  Treasury. 

It  would  be  of  advantage  to  the  Government  and  banks  on  the  Cana- 
dian and  Mexican  borders  and  elsewhere  to  have  receipts  for  customs 
so  deposited,  but  Congress  has  not  yet  changed  the  law  so  as  to 
permit  it. 

The  necessity  of  designating  National  banks  Government  Deposi- 
taries, in  addition  to  the  Sub-treasuries,  has  been  that  the  latter  sys- 
tem is  not  sufficiently  extended  to  meet  the  requirements  of  Collectors 
and  Disbursing  Officers,  and  the  designation  of  banks  is  determined 
by  the  requirements  of  the  Government  in  this  regard,  that  is,  the 
designation  of  what  are  known  as  Regular  or  Permanent  Depositaries, 
as  distinguished  from  Temporary  Depositaries. 

Regular  Depositaries  are,  as  before  stated,  designated  for  the 
convenience  of  the  Government  as  to  its  revenue  receipts  and  its 
disbursements. 

Temporary  Depositaries  are  National  banks  designated  for  special 
deposit  of  Government  funds.  The  provisions  of  Section  5153,  R.  S., 
invests  the  Secretary  of  the  Treasury  with  authority  to  deposit  all 
Public  Moneys  with  the  banks,  excepting  receipts  from  customs,  so 
that  when  there  has  accumulated  a  large  surplus  in  the  Treasury,  the 
Secretary  has,  for  the  business  interests  of  the  country,  utilized  the 
banks  to  put  in  circulation  a  certain  portion  of  such  surplus. 

The  first  extensive  use  of  the  banks  for  this  purpose  was  made  in 
1879,  at  the  time  of  the  resumption  of  specie  payments,  which  re- 
sulted in  the  accummulation  of  a  large  surplus,  and,  from  time  to 
time,  when  the  Government  receipts  have  been  largely  in  excess  of 
expenditures,  the  Secretary  has  placed  such  surplus  in  circulation  by 
designating  some  of  the  banks  as  Depositaries. 

19  265 


J266 

This  latter  class  of  Depositaries  are,  as  above  mentioned,  desig- 
nated in  various  sections  regardless  of  locality,  with  a  view  to  pro- 
moting business  interests. 

Secueity  fob  Public  Money  Deposits. — ^The  deposit  of  Public  Moneys 
with  the  banks,  whether  Permanent  or  Temporary  Depositaries,  is  made 
only  upon  the  banks  furnishing  security  satisfactory  to  the  Secre- 
tary of  the  Treasury  in  accordance  with  the  provision  of  the  law 
(Sec.  5153,  R.  S.)  that  he  shall  require  the  association  designated 
**  to  give  satisfactory  security  by  the  deposit  of  United  States  bonds 
and  otherwise." 

The  security  at  present  and  ordinarily  required  is  Grovernment  bonds, 
In  amount  (at  their  face  value)  equal  to  the  deposit  of  Public  Moneys, 
which  a  bank  is  authorized  to  hold.  The  minimum  bond  deposit  re- 
quired is  $50,000,  face  value,  and  the  ruling  of  the  Department  is 
that  no  bank  with  less  than  $50,000  capital  will  be  designated. 

The  Secretary  has  construed  this  provision  as  including,  not  only 
Government  bonds,  but  in  addition  to  them  (not  without  them)  other 
bonds,  which  in  his  judgment  would  be  good  security. 

Upon  this  construction  of  the  law  he  has  accepted  certain  State 
and  Municipal  bonds;  but  the  policy  of  the  Treasury  Department  is 
to  accept  other  security  in  addition  to  (Government  bonds  only  when 
the  former  are  at  a  very  high  premium,  and  therefore  diflBcult  to 
obtain. 

Amount  of  Deposit. — In  the  case  of  Regular  Depositaries,  the 
amount  of  deposits  allowed  is  according  to  the  receipts  in  the  dis- 
trict where  located,  and  if  the  receipts  are  large,  two  or  more  banks 
in  the  same  place  may  be  designated.  The  Collector  of  Internal  Rev- 
enues is  governed  by  the  instructions  of  the  Secretary  as  to  the  bank  or 
banks  with  which  he  shall  deposit.  Generally,  where  there  are  two  or 
more  Depositaries  he  is  permitted  to  alternate  his  deposits. 

Excess  of  Deposits. — Any  excess  of  Public  Moneys  deposited  over 
the  amount  for  which  the  bank  has  given  security  is  required  to  be 
remitted  to  the  nearest  sub-treasury  on  the  day  it  is  deposited. 

If  this  excess  is  continuous  and  large,  the  Secretary  may  permit 
a  bank  to  increase  its  limit  by  the  deposit  of  additional  security,  or 
may   designate   another   bank  an   additional   Depositary. 

Kind  of  Deposits. — The  deposits  with  banks  are  very  largely  from 
Collectors  of  Taxes  on  liquors  and  tobacco,  the  bulk  of  Internal 
Revenue  being  from  these  two  sources,  there  are  also  receipts  from 
sales  of  Public  Lands  and  more  or  less  from  miscellaneous  sources. 
These  deposits  of  revenue  receipts  from  all  sources,  excepting  on  im- 
ports, are  the  usual  deposits  with  Regular  Depositaries. 


267 

Other  sections  of  the  Revised  Statutes  provide  that  certain  other 
Government  Funds  may  be  deposited  with  the  banks. 

FIRST: — Funds  of  Disbuesing  Officers. — Sec.  3620,  R.  S.,  pro- 
vides that  "  in  places  where  there  is  no  Treasurer  or  Assistant 
Treasurer,  the  Secretary  of  the  Treasury,  when  he  deems  it  essential 
to  the  public  interest,  may  specially  authorize  in  writing  the  de- 
posit of  such  money  in  any  other  public  depositary,  or,  in  writing, 
authorize  the  same  to  be  kept  in  any  other  manner  and  under  such 
rules  and  regulations  as  he  may  deem  most  safe  and  effectual  to 
facilitate  the  payments  to  public  creditors." 

It  will  be  noted  that  such  deposits  cannot  be  made  with  banks  in 
places  where  there  is  a  Sub-treasury.  Second.  That  the  designation 
of  a  National  bank  as  a  Government  Depositary  under  Sec.  5153,  R. 
S.,  does  not  authorize  it  to  receive  such  deposits,  but  in  order  to  be- 
come a  Depositary  for  such  funds,  a  Regular  Depositary  must  be 
further  designated  specially  for  the  purpose.  Third.  The  provision 
that  the  Secretary  may  "  in  writing  authorize  Disbursing  Oflacers' 
Funds  to  be  kept  in  any  other  manner,  as  he  may  deem  most  safe  and 
effectual  to  facilitate  the  payments  to  public  creditors;"  up  to  the 
present  time  has  only  been  used  for  Disbursing  Officers  in  out  of 
the  way  places,  permitting  them  to  hold  their  own  funds  at  their  own 
risk,  but  generally  when  so  situated  Disbursing  Officers  keep  their 
funds  in  some  Depositary  in  New  York,  and  local  banks  are  glad  to 
secure  eastern  exchange  by  cashing  their  New  York  drafts. 

SECOND:— Funds  of  Postmasters. — Section  4046,  R.  S.,  provides 
that  any  Postmaster  may  deposit  under  the  direction  of  the  Post- 
master-General in  a  National  bank  designated  by  the  Secretary  of  the 
Treasury  for  that  purpose,  to  his  own  credit  as  Postmaster  any 
money-order  or  other  funds  in  his  charge,  or  negotiate  drafts  or  other 
evidences  of  debt  through  such  bank,  when  instructed  or  required 
to  do  so  by  the  Postmaster-General  for  the  purpose  of  remitting  sur- 
plus money-order  funds  from  one  post-office  to  another,  to  be  used  in 
payment  of  money-orders. 

The  Post-office  Department  has  found  very  little  occasion  for 
availing  itself  of  this  provision,  excepting  that  in  various  sections  of 
the  country  designated  Depositaries  have  been  authorized  to  receive 
surplus  money-order  funds  for  the  convenience  of  local  Postmas- 
ters, as  otherwise  it  is  necessary  for  the  Postmasters  to  purchase  ex- 
change to  transfer  such  funds.  These  deposits  are  reported  to  the 
Treasury  Department  like  other  deposits,  and  the  latter  credits  the 
Post-office  Department. 

THIRD: — Postmasters  Where  No  Depositary. — Section  3847,  R. 
S.,  provides  that  a  Postmaster  within  a  county  where   there   is   no 


268 

designated  Depositaries,  Treasurer  of  a  mint  or  Sub-Treasurer,  may, 
at  his  own  risk  and  in  his  official  capacity,  deposit  in  a  National  bank, 
in  the  place  or  county  where  he  resides. 

In  case  of  such  deposit  this  section  provides  that  no  authority  or 
permission  is,  or  shall  be,  given  for  the  demand  or  receipt  by  the 
Postmaster,  or  any  other  person  of  interest,  directly  or  indirectly, 
on  any  deposit  made  as  herein  described;  and  every  Postmaster  who 
makes  any  such  deposits  shall  report  quarterly  to  the  Postmaster- 
General  the  name  of  the  bank  where  such  deposits  have  been  made, 
and  also  state  the  amount  which  may  stand  at  the  time  to  his 
credit. 

It  will  be  seen  from  this  provision  of  the  law  that  arrangements 
for  deposits  referred  to  in  this  section  are  to  be  made,  not  with  the 
Postmaster-General,  but  with  the  local  Postmaster. 

CouET  Funds. — Provision  is  made  in  Sections  995  and  996,  Revised 
Statutes,  that  "All  moneys  paid  into  any  court  of  the  United  States 
or  received  by  the  officers  thereof,  in  any  case  pending  or  adjudicated 
in  such  court,  shall  be  forthwith  deposited  with  the  Treasurer,  an 
Assistant  Treasurer,  or  a  Designated  Depositary  of  the  United  States, 
in  the  name  and  to  the  credit  of  such  court:  Provided,  That  nothing 
therein  shall  be  construed  to  prevent  the  delivery  of  any  such  money 
upon  security,  according  to  agreement  of  parties,  under  the  direction 
of  the  court."  But  that  (Sec.  996,  R.  S.)  no  money  deposited  as 
aforesaid  shall  be  withdrawn  except  by  order  of  the  judge  or  judges 
of  said  courts  respectively,  in  term  or  in  vacation,  to  be  signed  by 
such  judge  or  judges,  and  to  be  entered  and  certified  of  record  by 
the  clerk;  and  every  such  order  shall  state  the  cause  in  or  on  ac- 
count of  which  it  is  drawn. 

The  deposit  of  moneys  referred  to  in  these  sections  of  the  Revised 
Statutes  come  under  Miscellaneous  Deposits.  Other  miscellaneous 
items,  such  as  "  the  Semi-Annual  Tax  on  National  Bank  Circulation, 
Patent  Fees,"  etc.,  are  not  frequent. 

Prohibitions. — Section  5488,  R.  S.,  imposes  a  penalty  on  any  Dis- 
bursing Officer  of  the  United  States  depositing  public  money  in- 
trusted to  him,  except  as  authorized  by  law. 

Section  5497,  R.  S.,  imposes  a  penalty  on  any  banker  or  broker  or 
other  person  not  an  authorized  depositary  of  public  moneys,  receiving 
from  a  Disbursing  Officer,  Collector  of  Internal  Revenue,  or  other 
agent  of  the  United  States,  any  public  moneys  excepting  in  payment 
of  a  debt  against  the  United  States. 

Accounting  for  Deposits  and  Disbursements. — A  National  bank 
having  received  the  designation  as  a  Depositary  of  public  moneys. 
Regular  or  Temporary,  and  having  made  the  deposit  with  the  U.  S. 


269 

Treasurer  of  the  security  required,  the  Secretary  of  the  Treasury, 
through  his  "  Public  Moneys  Division,"  orders  the  transfer  to  the 
bank  of  the  amount  of  funds  the  bank  is  authorized  to  hold,  unless 
the  daily  receipts  from  revenues,  etc.,  are  about  suflacient  to  cover  it. 
This  amount  can  be  used  as  any  ordinary  deposit,  and  in  the  case  of 
Temporary  Depositaries  is  simply  charged  to  the  bank  until  called 
in  by  the  Secretary.  In  the  case  of  Regular  Depositaries,  the  account 
becomes  active  by  deposits  from  Revenue  Collectors,  etal.  and  trans- 
fers.    Collectors  are  required  to  deposit  daily. 

The  account  is  in  the  name  of  the  Treasurer  of  the  United  States. 
It  is  credited  with  all  receipts  of  public  moneys,  from  whatever 
source  the  Depositary  is  authorized  to  receive,  and  debited  with  any 
transfer  of  excess  of  deposits  over  balance  allowed;  Treasury  drafts 
paid,  and  counter  entries,  if  any,  of  errors  in  account,  such  entries 
being  first  approved  by  the  Department. 

These  items  are  to  be  reported  daily  to  the  United  States  Treasurer, 
and  a  transcript  of  account  sent  him,  four  each  month  on  certain 
days  fixed  annually  by  the  Department,  and  a  duplicate  of  the  trans- 
cript to  the  Secretary  of  the  Treasury,  this  duplicate  to  be  accom- 
panied with  a  detailed  list  of  the  deposits  which  make  up  the  total 
receipts  reported  in  transcript.  A  separate  list  for  each  officer  deposit- 
ing, and  a  certificate  of  deposit  for  each  deposit  made,  is  also  to  be 
sent  on  the  day  the  deposit  is  made   to  the  Secretary. 

This  double  relation  with  the  Department  is  regarded  as  necessary 
on  account  of  the  Depositaries  being  under  the  direct  supervision  and 
control  of  the  Secretary,  while  the  management  of  the  funds  is  neces- 
sarily in  the  hands  of  the  Treasurer. 

The  transcript  shows  on  debit  side  all  moneys  paid.  These  payments 
may  be  on  transfer  orders.  Treasurer's  warrants,  or  on  Treasurer's 
•letter  of  instructions. 

The  certificates  of  deposits  are  issued  in  triplicate  or  duplicate  ac- 
cording to  the  nature  of  the  deposit,  which  determines  the  record  to 
be  made  of  same;  for  instance,  for  deposits  of  Collectors  of  Internal 
Revenue,  the  certificate  is  in  triplicate,  the  original  being  sent  to 
the  Secretary,  the  duplicate  to  the  Collector  of  Internal  Revenue,  to 
check  account  of  Collector,  and  the  triplicate  for  files  of  the  De- 
positary. 


PART  THIRD. 

Concerning  Ecports  of  National  Banks  to  the  Comptroller  of  the 
Currency — Lawful  Money  Eeserve — Five  Per  Cent.  Kedemption 
Fund — Eedemption  and  Eeissue  of  National  Bank  Notes — Semi- 
annual Tax  on  Circulation. 

Eeport  of  Condition  of  Banks. 

Eeport  of  Earnings  and  Dividends. 

Lawful  money  Eeserve. 
Deposits  Eequiring. 
Funds  Available  for. 
Eules  for  Computing. 
Examples  of  Computation. 

Five  Per  Cent.  Eedemption  Fund. 
Eemittances  for. 
Ledger  Account  of. 
Assessment  for  Expenses  of. 

Disposition  of  Notes  Eedeemed. 

New  Issue  for  Notes  Eedeemed  and  Destroyed. 

Semi-annual  Tax  on  Circulation. 
Form  for  Making  Eeturn. 
Eequirement  and  Penalty  for  Failure. 
Payments,  How  Made. 
Amount  of. 
Calculation  of.  .'  • 


271 


272 


Charter  No 
De 


FORM  OF  REPORT  OF  CONDITION  REQUIRED 

Report  of  the  condition  of  "  The ,"  at ,  in  the  State 


Resources. 


Dollars. 


1. 


2. 
3. 

4. 

5. 
6. 
7. 


Loans  and  discounts  on  which  officers 
and  directors  are  liable  either  as  pay- 
ers or  indorsers  (see  schedule) $. 

Loans  and  discounts  on  which  officers 
and  directors  are  not  liable  as  payers 
or    indorsers $ . 

Overdrafts,  secured,  $ — ;  unsecured,  $ —  (see  schedu 

U.  S.  Bonds  to  secure  Circulation  (par  value),  

per  cents,  per  cents 

U.  S.  Bonds  to  secure  U.  S.  Deposits   (par  value) 


e) 


per  cents, 


Other  Bonds  to  secure  U.  S.  Deposits 

U.  S.  Bonds  on  hand  (par  value)  per  cents 

Premium  on  Bonds  for  Circulation,  $ ;  Premium 

on  other  U.  S.  Bonds,  $ 


8.  Bonds,  Securities,  etc.,  including  premium  on  same 

(see  schedule) 

9.  Banking  House,  $ ;  Furniture  and  Fixtures,  $ 

10.    Other  Real  Estate  owned  (see  schedule) 


Cts. 


11.  Due  from  National  banks  ( not  approved  reserve  agents) 

12.  Di::   from    State   and   private   banks   and   bankers, 

trust  companies,  and  savings  banks 

13.  Due  from  approved  reserve  agents  (see  schedule) . . 


14. 
15. 
16. 
17. 


18. 


Checks  and  other  cash  items  (see  schedule) . . 

Exchanges  for  Clearing-house 

Bills  of  other  National  banks 

Fractional  paper  currency,  nickels,  and  cents 

Grold  coin $ . . 

Gold  certificates $ . . 

Gold  ctf s.  p'ble  to  order  $ . . 

Gold  cl'g-house  certifi's  $ . . 

Silver  dollars ? . . 

Silver  certificates $ . . 

Fractional  silver  coin.  $.. 


CO 


Specie, 
viz  : 


Total  coin  and  ctf s.  $ , 
Legal-tender  notes ^ . 


19. 


Redemption  fund  with  U.   S.  Treasurer   (not  more 

than  5  per  cent,  on  circulation) 

20.    Due  from  U.  S.  Treasurer 


Total 


I, 


-,  of  the  above-named  bank,  do  solemnly  swear 


that 


the  above  statement  is  true,  and  that  the  schedules  on  back  of  the 
report  fully  and  correctly  represent  the  true  state  of  the  several  matters 
herein  contained,  to  the  best  of  my  knowledge  and  belief. 

State  of  ,  County  of , 

Sworn  to  and  subscribed  before  me  this day 

of ,  190—. 


Place  for  seal.  No- 
tary must  not  be  an 
officer  or  director  of 
the  bank. 


Notary  Puhlic. 


Correct.    Attest : 


Cashier. 


Directors. 


To  be  rttested  by 
three Directorr  oth^r 
than  the  officer  veri- 
fying the  report. 


273 


BY  THE  COMPTROLLER  OF  CURRENCY. 

[Form  2130— Reports— 8-30-04] 

of ,  at  the  close  of  business  on  the day  of ,  190 — . 

Ce. 


6. 

7. 
8. 
9. 

10. 
11. 
12. 
13. 
14. 
15. 

16. 
17. 

18. 

19. 
20. 

21. 


Liabilities. 


T    Capital  stock  paid  in, 


2.  Surplus  fund 

3.  Undivided  profits,  including  amounts,  if 

any,  set  aside  for  special  purposes . .   $ . 
Less  current  expenses  and  taxes  paid.  $. 

4.  Circulating  notes  secured  by  U.  S.  bonds  $. 

Less  amount  on  hand  and  in  Treasury 
for  redemption  or  in  transit $. 


5.    State  bank  circulation  outstanding. 


Due  to  National  banks  (not  approved  reserve  agents) 

Due  to  State  and  private  banks  and  bankers 

Due  to  trust  companies  and  savings  banks 

Due  to  approved  reserve  agents  (see  schedule) 


Dividends  unpaid 

Individual  deposits  subject  to  check....  $.. 

Demand  certificates  of  deposit $. . 

Time  certificates  of  deposit $ . . 

Certified  checks $ . , 

Cashier's  checks  outstanding $ . . 


United  States  deposits 

Deposits  of  U.  S.  disbursing  oflScers. 
Bonds  borrowed 


Notes  and  bills  re-discounted 

Bills  payable,  including  certificates  of  deposit  repre- 
senting money  borrowed 

Liabilities  other  than  those  above  stated 


Total. 


Dollars. 


Cts. 


Note  1. — This  report  must  be  sworn  to  by  the  president  or  cashier, 
NOT  by  any  other  officer;  attested  by  not  less  than  three  directors,  and 
forwarded  to  the  Comptroller  of  the  Currency  with  the  least  possible  de- 
lay, as  it  is  desired  to  complete  the  summary  of  reports  as  soon  as  possi- 
ble after  a  call  has  been  issued. 

Note  2. — If  special  items,  use  the  blank  lines,  but  do  not  erase  or 
change  any  printed  item. 

Note  3. — Write  the  word  "  no  "  where  no  amount  Is  to  be  entered. 


274 


Loans  and  discounts.     (Including  loans  and  discounts  on  which  officers 

and  directors  are  Ua'ble.) 


A. — On  demand,  paper  with  one  or  more  individual 
or  firm  names %, 

B. — On  demand,  secured  by  stocks,  bonds,  and  other 
personal  securities $ , 

C. — On  time,  paper  with  two  or  more  individual  or 
firm  names $ , 

D. — On  time,  single  name  paper  (one  person  or  firm) 
without  other  security ^ %. 

E. — On  time,  securect  by  stocks,  bonds,  and  other  per- 
sonal  securities ' $ , 

F. — Secured  by  real  estate  mortgages  or  other  liens 
on  realty   (see  schedule) $, 


X. — Loans  for  account  of  correspondents  $- 


% 


Total   (item  1,  resources)    $ 


Included  in  the  above  are — 

G. — Bad  debts,  as  defined  in  Section  5204,  Re- 
vised  Statutes $ . 

H. — Other  suspended  and  overdue  paper   $ . 


'■{ 


Overdrafts. 


Secured : 
Standing  six  months  or 

over 

Temporary   

Ofiicers  and  Directors. . . 


Total  (item  2,  resources) 


\  \ 


Unsecured : 
Standing  six  months  or 

over  

Temporary 

Officers  and  Directors . . 


Total  (item  2,  resources) 


Bonds,  Securities,  etc.     (Bonds,  Claims,  Judgments,  and  similar  items 

should  be  included  under  this  head.) 


Enter  face 

value  of 

bonds. 

Name  of  corporation 
issuing  bonds,  etc. 

Am't  at  which 

carried  on 

books. 

Estim'd  actual 
market  value. 

State  whether  taken 

for  "debts  previously 

contracted." 

Total  (item  8,  resources) 

"' 

Other  Real  Estate  Owned. 


Describe  property,  state 

form  of  conveyance.and 

from  whom  obtained. 

Amount  at 
which  ca'd 
on  books. 

Prior  liens 

on 
property. 

Estimated 
value  of  , 
property.  _ 

Dat 
titl 
ace 

ewhen 
e  was 
[uired. , 

State  whe'r  taken 
for  *'  debts  previ- 
ously contrac'd." 

•  •• 

••«••• 

Total  (item  10,  resources) 





^••••••*  ••••••••••••••••••••• 

275 


Loans  and  Discounts  Secured  hy  Real  Estate  Mortgages  or  other  Liens 

on  Realty. 


Give  name  of  borrower, 

form  of  collateral,  and 

describe  i>roperty. 


Amount  at 
which  ca'd 
on  books 


.  Am't  prior 

lienonpr'y, 

if  any. 


Estimated 
value  of 
property. 


Date  when 

security 
was  taken. 


State  whe'r  taken 
for  "  debts  previ- 
ously  contrac'd." 


Total  (itwn  "F.^LoMH  «nd  Dii'g.) 


Checks  and  Cash  Items  other  than  Exchanges  for  C.  H. 


Checks  and  drafts  on  banks, 
etc.,  this  city,  not  members 
of  clearing-house 

Checks  and  drafts  on  other 
banks  not  members  of 
clearing-house 


Total  (item  15,  resources) 


Average  Reserve  and  Interest. 

Average  reserve  for  last  thirty  days  (in  bank  and  with  Reserve 
Agents)  on  deposits  and  bank  balances,  was per  cent.  The  high- 
est rate  of  Interest  paid  by  the  bank  on  deposits  is per  cent.    On 

notes  and  bills  re-discounted  is per  cent;  and  on  bills  payable  is 

per  cent. 


Certificates  of  Deposit  Representing  Money  Borrowed. 


To  whom  issued. 

Address. 

Amount  on  demand. 

Amount  on  time. 

Rate  of 
Int. 

Total  (include  in  item  20,  liabilities) 

Loans  Exceeding  the  Limit  Prescribed  ty  Section  5200  of  the  Revised 
Statutes,  including  Amounts  which  Exceed  this  Limit  due  from  State, 
Private  Banks  and  Bankers,  Trust  Companies,  and  Savings  Banks, 
Overdrafts,  if  any,  to  be  classed  with  Loans. 


Name  of  borrower. 

Enter  f 

0 

'uU  amount 
'  loan. 

Name  of  borrower. 

Enter  i 
ol 

"ull  amount 
rioan. 

276 


Balances  Due  From  or  to  Approved  Reserve  Agents. 
From —  To — 


Enter  name  and  loca-< 
tion  of  bank. 

Amount. 

Enter  name  and  loca- 
tion of  bank. 

Amount. 

f 

1 

Total  (item  14,  resources) 

1    Total  (item  9,  liabilities) 

LiaMUties  of  Officers  and  Directors. 

Names  of  Officers  and 
Directors. 


Official 
TiUe. 


President .. 

Cashier 

Vice-Pres't 
Asst.  Cash'r 
Directors. 

do 

do 

do 

do 


.See 

"Sis 


Total  (see  item  1,  resources) 


CG 


^O 


o 

<V  Q 

'C  u 
c  < 


:s  as 


Checks 

and  Cash 

Items. 


Over- 
drafts. 


No.  of 

shares 

Stock 

owned. 


277 

REPORT  OF  CONDITION  OP  BANK. 

[The  Comptroller  of  the  Currency  requires  that  National  banks  use 
only  the  printed  forms  furnished  by  his  office.  Written  forms  sent  by 
the  banks  will  not  be  accepted.] 

For  the  form  of  report  required  see  page .    The  various  items  of 

the  report  are  noted  below,  with  explanatory  notes  and  suggestions  in 
regard  to  preparing  reports. 

RESOURCES. 

1.  Loans  and  Discounts. — These  should  embrace  paper  of  all  kinds 
representing  money  loaned  by  the  bank.  The  various  classes  of  paper 
composing  the  total  are  to  be  scheduled  in  the  form  for  same,  on  back 
of  the  report;  also  properties  covered  in  loans  "  on  mortgages  and  other 
real  estate  security,"  if  any  such  occur,  and  full  information  as  to 
the  following  : 

"  Bad  debts,  as  defined  in  section  5204,  R.  S." 

"  Other  suspended  and  overdue  paper." 

"Liabilities  of  directors   (individual  or  firm)   as  payers." 

2.  Overdrafts. — Enter  the  total  of  balances  of  all  depositors'  accounts 
which  are  overdrawn.  These  should  be  carefully  classified  in  the 
proper  schedule  on  the  back  of  report.  While  overdrafts  are  unavoid- 
able under  certain  local  conditions  of  business,  they  should,  as  a  rule, 
not  be  allowed.  When  such  accommodation  to  a  responsible  customer 
is  called  for,  a  demand  note  should  be  taken  for  the  loan,  the  customer 
credited,  and  bills  receivable  charged.  If  a  certain  maximum  tem- 
porary credit  is  wanted  to  draw  against,  let  a  demand  note  be  given  the 
bank,  the  amount  passed  to  the  customer's  credit,  and  in  the  settle- 
ment the  customer  charged  interest  for  the  amount  checked  out : 

3.  United  States  Bonds  to  Secure  Circulation  (par  value). 

4.  United  States  Bonds  to  Secure  United  States  Deposits  (par  value). 

5.  Other  Bonds  to  Secure  United  States  Deposits. 

6.  United  States  Bonds  on  Hand  (par  value). 

Any  U.  S.  bonds  owned  by  the  bank,  but  loaned  to  any  other  National 
bank,  should  be  entered  as  a  loan  to  that  bank,  or  as  a  special  item 
"  U.  S.  bonds  loaned."  They  should  never  be  entered  as  on  hand  or  de- 
posited, as  the  report  of  the  bank  borrowing  them  will  show  them  in 
this  manner,  and  if  reported  by  the  bank  making  the  loan  would  result 
in  a  duplication  of  the  amount  of  bonds  actually  existing. 


278 

Bonds  other  than  U.  S.  bonds  deposited  to  secure  government  deposits 
should  be  shown  separately  from  U.  S.  bonds  at  their  par  value.  Any 
premium  on  them  should  be  shown  in  "  Bonds,  securities,  etc.,"  but  the 
bonds  themselves  should  not  be  shown  in  the  schedule  of  bonds, 
securities,  etc. 

Enter  these  at  their  par  value,  taking  care  to  indicate  by  the  interest 
rate  the  class  in  each  case.  If  more  than  one  kind  is  held  for  any  one 
of  the  purposes  named,  state  the  amount  and  class  of  each  kind 
separately. 

7.  Pbemitjm  on  Bonds  fob  Circulation — Peemium  on  Otheb  U.  S. 
Bonds. — Enter  the  premium  on  U.  S.  bonds  only  at  the  actual  market 
value  of  same,  taking  care  to  state  the  premium  on  bonds  held  "  for  cir- 
culation "  separately  from  that  on  "other  U.  S.  bonds."  Premium  on 
bonds  of  any  other  kind,  on  stocks,  etc.,  must  not  be  entered  here,  but 
included  in  item  of  "  stocks,  securities,  etc." 

8.  Bonds,  Securities,  etc.,  Including  Premium  on  Same. — This 
should  embrace  securities  of  all  kinds  (other  than  U.  S.  bonds)  which 
are  owned  by  the  bank,  viz.:  bonds,  stocks,  chattel  mortgages,  judg- 
ments, claims,  city  or  county  warrants,  etc.  Securities  held  as  col- 
lateral for  loans  must  not  be  entered  here.  Under  claims  include  all 
amounts  due  from  failed  or  liquidating  banks  or  corporations  including 
National  banks.  These  securities,  etc.,  should  be  entered  in  the  report 
at  the  values  at  which  they  stand  on  the  books  of  the  bank,  and  the 
"  book  "  value  should  always  represent  the  actual  "  market "  value  as 
nearly  as  possible.  Real  estate  securities  and  real  estate  owned  by  the 
bank  must  not  be  entered  here  but  with  loans  secured  by  real  estate 
and  "  other  real  estate."  All  the  items  composing  the  total  should  be 
listed  in  the  proper  schedule  on  back  of  the  report. 

9.  Banking  House. — Enter  at  its  took  value  (as  nearly  market  value 
as  possible),  only  such  real  estate  held  by  the  bank  under  section  5137, 
"  necessary  for  its  immediate  accommodation  in  the  transaction  of  its 
business,"  and  no  other. 

PuBNiTUEE  AND  FIXTURES. — Enter  at  their  actual  value  to  the  bank  all 
furniture  and  fixtures  used  in  the  conduct  of  its  business. 

10.  Other  Real  Estate  and  Mortgages  Owned. — Give  the  tooTc  value 
of  all  real  estate  (except  the  banking-house  property)  owned  by  the 
bank  and  held  by  virtue  of  any  deed,  mortgage,  vendor's  lien,  or  other 
instrument  in  writing.  Any  real  estate  not  owned  by  the  bank, 
but  held  by  it  as  collateral  for  loans,  should  not  be  included  here, 
but  in  "loans  and  discounts,"  and  scheduled  in  the  proper  place  on 
back  of  the  report.  All  transactions  in  real  estate  should  be  made  in 
Btrict  conformity  with  the  provisions  of  section  5137,  which  clearly  de- 


279 

fines  the  purposes  for  which  banks  "may  purchase,  hold  and  convey" 
real  estate.  The  evident  intent  of  the  restrictions  there  imposed  was  to 
prevent  b^ks  from  investing  their  resources  in  a  form  which  was  not 
readily  convertible. 

11.  Due  fbom  National  Banks,  Not  Approved  Agents. — Enter  the 
total  amounts  due  from  such  National  banks  as  are  not  "  approved  re- 
serve agents." 

12.  Due  fbom  State  and  Private  Banks  and  Bankers,  Trust  Com- 
panies AND  Savings  Banks. — Enter  the  total  amounts  due  from  such 
banks  and  bankers  as  distinguished  from  National  banks.  It  has  al- 
ways been  held  by  the  Comptroller's  ofBce  that,  as  these  institutions  are 
either  corporations,  firms,  or  individuals,  any  balance  held  by  them  in 
excess  of  one-tenth  of  the  capital  stock  of  the  bank  must  be  regarded 
as  an  excessive  loan  made  in  violation  of  section  5200.  All  such  exces- 
sive balances  should,  therefore,  be  entered  in  schedule  for  "  loans  ex- 
ceeding the  limit  prescribed  by  section  5200,"  etc.,  on  the  back  of  the 
report. 

13.  Due  from  Approved  Reserve  Agents. — EntiBr  the  total  amounts 
due  from  such  National  banks  as  have  been  approved  as  "  reserve 
agents  "  by  the  Comptroller  and  from  such  banks  only.  Amounts  due 
from  banks  in  liquidation  or  insolvent  which  had  been  reserve  agents 
should  not  be  entered  here.  Take  care  to  enter  in  the  proper  schedule 
on  the  back  of  report  the  name  of  each  such  "  reserve  agent,"  the 
location  of  same,  and  the  amount  due  from  it. 

14.  Checks  and  Other  Cash  Items. — This  should  include  only  such 
items  as  are  readily  convertible  into  casU^  and  no  others.  Items  of  ex- 
penses and  taxes  paid,  dishonored  drafts  and  checks,  overdrafts  and 
similar  items  should  be  charged  to  appropriate  accounts.  Be  careful  to 
schedule  items  on  back  of  report,  properly  classified,  and  see  that  the 
statements  in  schedule  of  these  items  on  back  of  report  and  of  all 
schedules  agree  with  face  of  the  report. 

15.  Exchanges  fob  Cleabing-House. — These  are  checks  or  drafts  on 
hanks  which  are  members  of  a  clearing-house,  and  will  occur  only  in 
the  case  of  a  bank  located  in  a  place  where  there  is  a  clearing-house. 

16.  Bills  of  Other  National  Banks. — ^Enter  circulating  notes  issued 
by  other  National  banks,  and  these  only.  If  a  bank  has  any  notes  of  its 
own  issue  on  hand,  they  must  be  entered  under  "  Notes  received  from 
Comptroller  "  in  "  liabilities." 

17.  Fbactional  Paper  Cubrency,  Nickels  and  Cents. — Silver  frac- 
tional currency  must  not  be  included  here,  but  under  "  specie." 


280 

* 

18.  Items  of  Lawful  Money  Reseeve  in  Bank. 

Specie. — ^Enter  only  coin  (not  nickels,  or  cents)  and  certificates 
representing  coin,  taking  care  to  state  the  amount  of  each  kind  in  its 
proper  place  in  schedule.  Every  bank  should  keep  a  daily  record  of 
such  items  in  this  form,  to  have  the  data  for  call  for  report  of  con- 
dition which  is  always  made  for  a  past  date. 

Gold  Certificates. — This  item  should  show  certificates  of  deposit 
issued  for  gold  deposited  with  the  Treasurer,  the  lowest  denomination 
being  $20. 

Gold  Certificates  psdVable  to  order  issued  under  the  act  of  March  14, 
1900. — This  item  should  show  only  certificates  issued  for  gold  deposited, 
payable  to  the  order  of  the  bank  making  the  deposit,  the  minimum 
amount  being  $10,000.  The  only  exception  to  this  amount  is  in  the  case 
of  a  bank  which  still  holds  a  certificate  payable  to  order  issued  under 
the  law  before  amended  which  permitted  such  certificates  for  $5,000 
each. 

Gold  Clearing  House  Certificates. — Only  banks  which  are  members  of 
a  Clearing-House  Association  can  hold  these  certificates,  which  repre- 
sent a  deposit  made  with  the  clearing-house  of  which  the  bank  is  a 
member,  under  the  provisions  of  section  5192,  U.  S.  R  .S. 

Legal  Tender  Notes. — Enter  only  U.  S.  Treasury  "legal  tender" 
notes,  taking  care  not  to  include  any  "  National  bank  "  notes. 

19.  Redempton  Fund  With  U.  S.  Treasubeb  (not  more  than  5  per 
CENT.  ON  circulation). — Enter  the  actual  amount  on  deposit  with  the 
Treasurer  of  the  U.  S.  for  the  redemption  of  circulation  issued  by  the 
bank  for  which  it  is  still  liable. 

No  amount  greater  than  five  per  cent,  of  the  circulation  outstanding 
should  be  entered  here.  If  a  larger  amount  is  on  hand  with  the  Treas- 
urer the  excess  over  the  five  per  cent,  of  circulation  should  be  entered 
as  "  Due  from  U.  S.  Treasurer." 

The  redemption  and  the  circulation  accounts  should  be  kept  entirely 
separate.  Only  amounts  remitted  or  due  to  the  Treasurer  should  enter 
into  redemption  account.  Notes  received,  destroyed,  etc.,  should  be  en- 
tered in  circulation  account  only. 

20.  Due  from  U.  S.  Treasurer. — This  Is  intended  to  include  any 
amounts  due  to  the  banks  from  the  U.  S.  Treasurer  (other  than  five  per 
cent,  fund),  such  as  notes  of  other  National  banks  or  other  forms  of 
currency  or  bonds  forwarded  to  him  for  redemption. 


LIABILITIES. 

1.  Capital  Stock  Paid  In. — Enter  only  "  capital  stock  paid  in  "  for 
which  a  certificate  has  been  received  from  the  Comptroller.  "  Capital 
stock  paid  in  "  for  which  no  certificate  has  been  received  by  the  bank  at 
date  of  call  for  report  must  not  be  included  here,  but  entered  under 
item  21,  "  Liabilities,  etc." 

2.  Surplus  Fund. — This  should  show  whatever  amount  has  been 
placed  to  the  credit  of  this  fund  in  accordance  with  the  requirements  of 
section  5199. 

3.  Undivided  Profits. — This  should  represent  such  profits  as  have  not 
been  applied  to  the  payment  of  expenses,  losses,  increase  of  surplus 
fund  (where  still  necessary),  or  of  dividends.  Profits  from  all  sources 
should  be  collected  under  this  head.  Profits  of  the  bank  carried  in 
special  accounts,  such  as  "  contingent  fund,"  etc.,  should  be  included 
with  undivided  profits  or  entered  as  a  special  item  under  the  title  given 
to  the  account. 

Current  Expenses  and  Taxes  Paid. — This  should  embrace  all  items 
of  expenses  and  taxes  paid,  but  not  charged  ofC  to  "  undivided  profits," 
and  the  total  deducted  from  that  item  to  give  net  undivided  profits. 
Where  expenses,  taxes,  etc.,  exceed  the  total  earnings,  the  earnings 
should  be  deducted  from  expenses  and  the  remainder  shown  as  a  special 
item  "  Expenses,  etc.,"  on  the  side  of  resources. 

4.  Circulating  Notes  Secured  by  U.  S.  Bonds. — ^Enter  the  total  of 
circulaton  outstanding  for  which  the  tanh  is  UaMe.  A  bank  is  no 
longer  liable  for  circulating  notes  for  the  redemption  of  which  it  has 
deposited  lawful  money  with  the  U.  S.  Treasurer.  Should  it  have  any 
of  its  own  notes  "  on  hand "  or  "  in  Treasury  for  redemption  or  in 
transit,"  they  should  be  deducted  here  from  the  total  circulation  re- 
ceived, and  the  balance  carried  to  outer  column  as  circulation  out- 
standing. 

5.  State  Bank  Circulation  Outstanding. — This  will  apply  only  in 
the  case  of  State  banks  converted  to  National  banks,  and  refers  to  cir- 
culating notes  issued  by  such  banks  prior  to  their  conversion,  and  not 
presented  for  redemption. 

6.  Due  to  National  Banks  [not  Approved  Reserve  Agents]. —  Enter 
the  total  amounts  due  to  other  National  banks.  Any  amount  which 
represents  money  borrowed  for  a  stated  period  of  time  from  another 
bank  should  be  entered  below  in  item  of  "  bills  payable." 

20  381 


282 

7.  Due  to  State  and  Pbivate  Banks  and  Bankers. — This  should  em- 
brace all  amounts  due  to  such  banks  and  bankers.  Remarks  as  to 
"  money  borrowed  "  made  in  preceding  paragraph  are  applicable  here 
also. 

8.  Due  to  Trust  Companies  and  Savings  Banks. — Any  amounts  due 
to  trust  companies  or  savings  banks  should  be  entered  here,  whether 
due  on  open  account  or  otherwise,  and  should  under  no  circumstances 
be  included  with  individual  deposits. 

9.  Due  to  Approved  Reserve  Agents. 

10.  Dividends  Unpaid. — Enter  the  total  of  dividends,  if  any,  to  credit 
of  shareholders  on  books  of  the  bank  not  yet  called  for  by  them. 

11-15.  Individual  Deposits  Subject  to  Check — ^Demand  Certificates  of 
Deposit — ^Time  Certificates  of  Deposit — Certified  Checks — Cashier's 
Checks  Outstanding. — These  embrace  all  classes  of  deposits  (other 
than  those  of  the  U.  S.  or  its  disbursing  officers).  They  should  be  care- 
fully classified,  according  to  character.  If  the  bank  has  a  savings  de- 
partment, all  deposits  received  in  it  should  be  classified  according  to  the 
form,  or  if  preferred  may  be  entered  as  a  special  item,  stating  whether 
on  time  or  demand  in  the  classification.  If  certificates  of  deposit  have 
been  issued  for  "  money  borrowed  "  by  the  bank,  they  should  not  be 
entered  here,  but  in  the  item  of  "  bills  payable."  "  Overdrafts,"  if  any, 
should  not  be  deducted  from  the  total  amount  at  credit  of  deposits,  but 
should  be  stated  separately  under  item  of  "  overdrafts." 

16.  United  States  Deposits. — Enter  the  total  of  deposits  made  by 
the  U.  S.  Government  other  than  those  made  by  its  disbursing  officers. 

17.  Deposits  of  U.  S.  Disbursing  Officers. — Enter  only  such  deposits 
of  Grovernment  funds  as  are  subject  to  check  by  its  disbursing  officers. 

18.  Bonds  Bobrovted. 

19.  Notes  and  Bills  Rediscounted. — This  should  include  any  portion 
of  the  "  loans  and  discounts  "  which  has  been  rediscounted  by  the  bank 
for  which  it  may  be  in  any  way  liable,  by  indorsement  or  otherwise. 
While  circumstances  render  rediscounts  necessary  at  times,  the  re- 
sources of  the  bank  should  not  be  too  largely  used  in  this  way,  and 
only  for  short  periods  <\f  time,  to  supply  temporary  demands  of  good 
customers. 

20.  Bills  Payable. — Enter  the  total  amount  of  "  money  borrowed  " 
by  the  bank,  which  is  represented  either  by  its  note,  certificate  of  de- 


283 

posit,  or  other  instrument  issued  by  it,  or  by  any  credit  given  it  by  any 
bank  or  banker  which  is  intended  as  a  loan  to  it  for  any  stated  period 
of  time.  Money  borrowed  by  means  of  "  rediscounts  "  or  "  bills  pay- 
able "  (as  defined  in  this  paragraph),  if  it  exceeds  the  amount  of  the 
capital  stock,  is  in  violation  of  section  5202. 

21.  Otheb  Liabilities  (Miscellaneous). — This  total  is  intended  to 
represent  small  items.  If  it  includes  any  large  items,  specify  what 
they  are. 

AvEBAQE  Resebve  AND  INTEREST. — See  that  the  '*  average  reserve  "  for 
the  thirty  days  preceding  the  date  of  the  call  is  entered  in  the  proper 
place  on  back  of  the  report,  as  also  "  the  highest  rate  of  interest  paid  by 
the  bank  "  on  any  money  deposited  with  or  borrowed  by  it. 

Suggestions. — Before  the  report  is  signed,  see  that  the  footings  of 
"  liabilities  "  and  "  resources  "  balance;  and  that  the  items  on  each  side 
are  in  their  proper  places  observing  the  rulings  of  the  columns; 
for  example,  two  or  four  figures  should  not  be  entered  in  the  columns 
intended  for  hundreds  and  thousands.  Totals  of  all  items  should  be 
entered  in  the  outer  columns  where  the  form  so  indicates,  and  should 
not  be  entered  inside  and  included  with  the  total  of  specie,  deposits  or 
any  other  item  as  extended  into  the  outer  column.  For  instance, 
balances  due  to  banks  or  dividends  unpaid  should  not  be  entered  di- 
rectly above  the  classification  of  deposits,  added  in  with  deposits,  and 
the  total  extended  into  the  outer  column  as  deposits,  but  each  of  these 
items  should  be  extended  separately.  Be  careful  to  have  all  schedules 
on  back  of  the  report  properly  filled  out,  and  that  the  total  of  items  in 
each  schedule  agrees  with  item  in  the  face  of  the  report.  Where  there 
are  no  items  to  be  entered  in  any  schedule  on  the  back  of  report,  write 
the  word  "  none,"  as  items  are  frequently  omitted  through  inadvertence, 
and  correspondence  is  made  necessary  thereby.  Give  number  and 
name  of  bank  on  each  loose  schedule  of  report.  See  that  the  correct 
date  is  entered  in  the  heading  of  the  report.  The  report  itself  and  all 
signatures  thereto  should  be  in  ink  in  permanent  form.  Lead  pencil 
should  never  be  used  for  this  purpose.  An  exact  copy  of  the  report 
should  always  be  retained  by  the  bank. 

Oath  and  Attestation. — ^The  report  must  be  sworn  to  by  the  presi- 
dent or  cashier  (not  the  assistant  cashier),  and  no  other  officer  of  the 
ItanTc  is  qualified  to  do  this.  The  report  must  be  sworn  to  in  the  same 
State,  as  the  law  provides  that  the  notary  administering  the  oath  must 
have  been  commissioned  by  the  State  where  he  resides  and  the  bank 
is  located,  and  the  date  when  sworn  to  entered  in  the  jurat.  See  that 
notory  affixes  seal.  The  attestation  must  be  by  three  directors;  the 
officer  signing  the  report  must  not  attest  to  its  correctness  as  a  director. 


284 

and  the  oath  of  the  officer  signing  must  he  acknowledged  before  an 
official  having  a  seal  of  office  and  one  not  an  officer  of  the  bank.  See 
section  5211  and  act  February  26,  1881. 

Publication  of  Reports. — Reports  must  be  published  in  a  newspaper 
of  the  place,  or,  if  it  has  none,  in  one  in  the  nearest  place  in  the  same 
county,  and  proof  furnished  of  publication  to  the  Comptroller.  (See 
section  5211.)  If  the  bank  has  been  opened  for  business  even  for  part 
of  a  day  on  the  date  a  report  of  condition  is  called  for  a  report  should 
be  made  up  and  published.  The  Comptroller  furnishes  a  convenient 
form  for  printer's  "  copy."  The  report  must  not  be  condensed  for  pub- 
lication, but  conform  fully  to  report  sent  the  Comptroller,  excepting  the 
schedules  on  back.  The  copy  of  report  of  condition  on  the  back  of 
proof  of  publication  should  be  an  exact  copy  of  the  face  of  the  report 
of  condition,  and  the  signatures  of  directors,  notary  and  officer  swear- 
ing to  the  report  may  be  copied  on  the  blank  furnished  to  the  printer. 
It  is  not  necessary  for  the  directors  to  personally  sign  anything  but  the 
original  report,  and  this  is  true  with  regard  to  the  signatures  of  the 
notary  and  the  officer  swearing  to  the  report. 

The  form  of  affidavit  required  for  proof  is  furnished  to  the  banks 
when  reports  are  called  for,  and  the  instructions  therewith  must  be 
strictly  complied  with.  The  seal  of  the  officer  before  whom  the  printer 
makes  oath  to  publication  of  the  report  must  be  affixed  to  the  certificate 
of  publication. 

SCHEDULES. 

Schedule  of  Loans  and  Discounts. — Item  A  is  to  cover  only  demand 
paper,  with  one  or  more  individual  or  firm  names,  not  otherwise 
secured. 

Items  B  and  E  should  include  only  loans  and  discounts  secured  by 
stocks,  bonds,  etc.  (not  stocks,  bonds,  etc.,  owned  by  the  bank). 

Item  C  should  include  only  paper  bearing  more  than  one  name,  run- 
ning for  a  stated  time,  without  other  security. 

Item  D  includes  time  paper  signed  by  only  one  individual  or  firm  and 
not  otherwise  secured. 

Item  F  should  include  all  paper  secured  directly  or  indirectly  by  real 
estate  and  should  agree  in  mount  with  the  total  of  items  shown  in  the 
schedule  for  "  loans  and  discounts  secured  by  real  estate  mortgages  or 
other  liens  on  realty."  Paper  bearing  more  than  one  name  should  be 
included  here  and  not  with  item  C  if  any  portion  of  it  is  secured  by 
real  estate. 

Loans  on  account  of  correspondents  should  show  all  loans  made  for 
correspondents  where  the  notes  and  securities,  or  the  securities  only, 
are  held  by  the  bank  making  the  loans,  but  the  amount  should  not  be 
included  with  the  total  of  this  schedule  or  shown  in  item  1  on  the  face 
of  the  report. 


285 

The  total  of  this  schedule  should  agree  with  the  amount  shown  op- 
I)Osite  item  1  of  resources  on  the  face  of  the  report. 

The  amounts  of  G  and  H  are  not  in  addition  to  other  items  of  loans 
and  discounts,  but  should  show  the  paper  classed  under  the  above  items 
which  is  overdue  or  bad  debts.  If  none  of  the  paper  held  is  overdue  or 
classed  as  bad  debts,  the  word  none  should  be  written  in,  as  otherwise 
the  report  is  incomplete. 

All  paper  which  has  passed  the  date  of  maturity  without  pajrment  or 
renewal  is  overdue.  Paper  upon  which  the  Interest  is  past  due  and 
unpaid  for  six  months  should  be  classed  as  bad  debts  unless  J)oth  well 
secured  and  in  process  of  collection. 

OvEBDRAFTS. — ^All  advanccs  made  for  any  purpose,  for  which  no  notes 
*  drafts,  etc.,  are  held  by  the  bank,  should  be  entered  as  overdrafts,  and 
should  under  no  circumstances  be  included  with  loans  and  discounts. 

Bonds,  Secubities,  etc. — See  notes  on  these  items  on  face  of  report. 
The  total  book  value  of  this  schedule  should  agree  in  amount  with  item 
of  resources  on  face  of  report  "  Bonds,  securities,  etc."  No  items 
secured  by  real  estate,  however,  should  be  entered  in  this  schedule,  but 
they  should  appear  in  the  schedule  for  real  estate  loans  or  real  estate 
owned,  as  the  case  may  be. 

Otheb  Real  Estate  Owned. — ^Aill  real  estate  owned  by  the  bank 
(except  that  occupied  as  a  banking  house)  should  be  entered  in  this 
schedule. 

No  matter  how  long  real  estate  has  been  held  it  should  be  shown  on 
the  books  and  in  reports  at  its  actual  value,  and  should  not  be  charged 
off  unless  worthless.  The  law  in  providing  that  real  estate  shall  be 
disposed  of  within  five  years  refers  to  the  title  and  not  to  the  appear- 
ance of  its  value  on  the  books.  Until  actually  sold,  it  should  be  shown 
among  the  assets. 

The  total  book  value  of  this  item  should  agree  with  item  "  Other  real 
estate  owned  "  of  resources  on  the  face  of  the  report,  and  should  never 
be  included  in  the  schedule  of  loans  and  discounts  under  item  F. 

Loans  and  Discounts  Secubed  by  Real  Estate  Mobtgages  ob  Otheb 
Liens  on  Realty. — This  schedule  should  show  every  loan  in  any  way 
secured  by  real  estate,  and  give  the  information  required  by  the  dif- 
ferent headings  of  the  schedule  in  each  case.  When  the  space  provided 
in  the  form  for  report  is  insufficient  to  list  all  such  loans  a  complete 
list  should  be  made  on  an  extra  sheet  of  paper  and  attached  to  the 
report. 

The  aggregate  book  value  of  these  loans  shown  by  the  schedule 
should  agree  with  item  F  of  the  schedule  of  loans  and  discounts,  and 
should  be  included  in  item  1  of  resources  on  the  face  of  the  report.    It 


286 

should  never  be  confused  with  "  other  real  estate  owned  "  nor  entered 
as  such  on  the  face  of  the  report. 

Ceetificates  of  Deposit  Repeesenting  Money  Borrowed. — ^This 
schedule  should  show  all  certificates  issued  for  money  borrowed,  but 
not  certificates  issued  for  deposits  received  unsolicited  in  the  ordinary 
course  of  business.  The  amount  shown  in  this  schedule  should  be  in- 
cluded with  item  "  Bills  payable  including  certificates  of  deposit  repre- 
senting money  borrowed  "  on  the  face  of  the  report,  and  should  be  pub- 
lished as  "  bills  payable,"  which  they  represent. 

Loans  Exceeding  the  Limit  Prescribed  by  Section  5200,  U.  S.  R.  S. — 
All  balances  from  banks  other  than  national  which  exceed  10  per  cent. 
of  the  capital  should  be  entered  here.  In  the  loans  to  individuals 
should  be  included  all  paper  upon  which  the  same  party  is  signer, 
whether  singly  or  jointly,  all  paper  made  for  his  accommodation  and  all 
overdrafs  to  him,  and  if  the  total  exceeds  10  per  cent,  of  the  capital  the 
excessive  loan  should  be  reported  in  this  schedule. 

In  loans  to  firms  or  companies  (not  incorporated)  should  be  in- 
cluded the  liabilities  of  individual  members  thereof,  accommodation 
paper  and  overdrafts. 

Loans  to  corporations  should  not  include  loans  to  shareholders  there- 
in, unless  made  for  the  accommodation  of  the  corporation. 

Commercial  or  business  paper  actually  owned  by  the  person  negotiat- 
ing the  same  and  bills  of  exchange  drawn  in  good  faith  against  actually 
existing  values  are  not  to  be  included  with  other  liabilities  in  listing 
excessive  loans. 

Where  a  loan  not  in  excess  of  10  per  cent,  of  capital  has  been  made, 
and  the  bank  is  afterwards  obliged  to  secure  it  by  real  estate  to  prevent 
loss,  and  in  so  doing  is  obliged  to  increase  the  amount  either  by  a 
further  advance  or  the  purchase  of  a  prior  lien  in  order  to  protect  its 
interest,  thus  making  the  total  amount  of  the  loan  more  than  10  per 
cent,  of  the  capital,  this  should  not  be  reported  as  an  excessive  loan,  but 
only  with  loans  secured  by  real  estate.  The  courts  have  held  that  it  is 
within  the  rights  of  a  bank  to  make  such  further  investment  where 
necessary  to  protect  a  previous  loan,  even  though  the  total  exceeds  the 
10  per  cent,  limit. 

Balances  Due  from  ob  to  Approved  Reserve  Agents. — The  correct 
title  of  each  reserve  agent  should  be  given.  Where  a  bank  has  changed 
its  title,  or  has  been  consolidated  with  another  bank  under  the  title  of 
the  other  bank,  the  new  title  should  be  entered. 

Any  amounts  due  from  banks  in  liquidation  or  insolvent,  which 
were  formerly  approved  reserve  agents,  should  be  reported  in  "Bonds, 
securities,  etc.,"  and  not  with  amounts  due  from  reserve  agents. 

The  total  of  amounts  due  from  reserve  agents  as  shown  by  the 
schedule  should  be  entered  in  resources  as  due  from  reserve  agents,  and 


287 

the  total  due  to  reserve  agents  as  shown  by  the  schedule  should  be  en- 
tered in  liabilities  as  due  to  reserve  agents.  One  of  these  items  should 
not  be  deducted  from  the  other  and  only  the  difference  shown  on  the 
face  of  the  report. 

All  amounts  actually  due  to  a  reserve  agent  on  collection  or  any  other 
account  should  be  shown  as  due  to  that  reserve  agent,  as  only  net 
balances  due  from  reserve  agents  are  available  as  reserve. 

Liabilities  of  Officebs  and  Dikectors. — The  total  amount  for  which 
each  director  or  oflScer  is  liable,  either  as  payer  or  endorser,  should  be 
entered  in  this  schedule.  Any  paper  upon  which  two  or  more  directors 
are  jointly  liable  should  be  entered  against  each  of  them,  but  the 
amount  of  such  liabilities  above  the  face  of  the  paper  should  be  entered 
as  a  special  item  at  the  foot  of  the  schedule,  reading,  "  amount  of 
joint  liabilities  of  oflacers  and  directors  over  face  of  paper,"  and  this 
amount  deducted  from  the  total  of  items  entered  therein,  in  order  that 
the  final  total  may  represent  the  true  amount  of  paper  held  by  the 
bank  upon  which  directors  or  officers  are  liable,  and  agree  with  this 
item  as  included  in  item  one  of  resources  on  the  face  of  the  report. 


288 


[Form  3129. — Reports  11-12-03.] 

Eeport  of  Earnings  and  Dividends 

No.  of  Bank No.  of  Dividend 

Capital  stock  at  close  of  this  earning  period,  $ 

"  Th0 /*  located  at ,  in  the 

State  of ,  for  the  period  of months  ending , 

190. ..     Declared ,  190. ..     Payable ,  190. .. 

FIRST  SECTION. 


3.  Premiums    on    U.    S.    bonds 

charged  off  since  last  report 

4.  Losaes  sustained  throUgh  bad 

debts,    decrease    of    values, 
etc.,  since  last  report 

5.  Expenses     and     taxes     paid 

since  last  report 

Totals  of  items  3    4   and  5 

1.  Gross    earnings    and    profits 

made  since  last  report .... 

2.  Losses    recovered    since    last 

report    (if  any) 

•  •••• 

•  *• 

•  •• 

..... 

... 
... 

•6.  Net   •arnings    and   profits   or 
loss    of    past    six    months 
carried  down  to  second  sec- 
tion    

— 

Total 

Total 

■ 

•  •••• 

•  •• 

SECOND    SECTION. 


12.  Carried  to  surplus  fund  (not 
less  than  one-tenth  of  item 
6,  unless  surplus  Is  already 
20  per  cent,  of  capital) .  . 


13.  Dividend  of. 
capital,  $. . 


.per  cent,  (on 


14.  Amount  of  net  profits  undi- 
vided or  loss  to  b«  carried 
forward  to  item  7  of  next 
report   


Total . 


*6.  Net  earnings  and  profits  or 
loss  of  past  six  months 
brought  down  from  first 
section    

7.  Undivided     profits      or      loss 

brought  forward  from  item 
14  of  last  report 

8.  Amount  withdrawn  from  sur- 

plus since  last  report 

t9.  Authorized  reduction  of  capi- 
tal used  to  meet  lossts  or 
passed  to  profit  account 
since  last  report 

10.  Paid    assessment    on    capital 

stock  since  last  report 

11.  Subscribed    and    paid    in    by 

shareholders  since   last  re- 
port as  surplus  or  profits. . 


Total . 


THIRD   SECTION. 


18.  Total  surplus  fund  proper  at 
date  of  this  report 


19. 
20. 


Total  dividends  since  organi 
zation  as  National  bank.  . 

Amount  of  net  profits  undi- 
vided or  loss  to  be  carried 
forward  to  item  7  of  next 
report   


Total . 


15. 


Total  profits  as  National 
bank  since  organization 
(less    expenses,    premiums, 

losses,  etc. )  

16.  Add  profits  and  surplus  of 
old  organization  at  date  of 
conversion   to   the   national 

system   

Total  paid  in  by  sharehold- 
ers and  reduction  of  capi- 
tal used  to  meet  losses  and 
passed  to  profits 


tl7. 


Total . 


Statu  of- 


Gounty  of- 


} 


ss: 


Sworn  to  and  subscribed  before  me  this 


I. 


day  of 


190 — . 


-,  Notary  Public. 


,  Cashier  of  the  above-named  bank,  do  solemnly  swear  that  the 

above  statement  Is  true,  to  the  best  of  my  knowledge  and  belief. 

,  Cashier. 

*  In  case  the  loss  exceeds  the  profits  for  the  six  months,  the  excess  of  loss  over 
the  profits  should  be  entered  in  item  6  in  red  ink  and  deducted  from  total  amount 
charged  off.     (Items  3,  4,  and  5.) 

^  t  Any  reduction  of  capital  other  than  that  used  to  meet  losses  or  passed  to  undi- 
vided profits  is  not  to  be  entered  on  this  report  and  can  be  omitted  where  previously 
included, 


289 

REPORT  OF  EARNINGS  AND  DIVIDENDS. 

For  form  of  report  required  see  page .    The  various  items  of  the 

report  are  noted  below,  with  explanatory  notes  and  suggestions  in  re- 
gard to  preparing  reports. 

Blanks  for  making  up  this  report  are  furnished  by  the  oflSce  of  the 
Comptroller  of  the  Currency.  In  filling  out  the  heading  of  the  blank 
be  careful  to  enter — 

First.  Charter  number  of  bank.  Second.  Date  at  which  dividend 
period  ends.  Third.  Date  of  declaration  of  dividend.  Fourth.  Date  at 
which  dividend  is  payaNe.    Fifth.  Enter  exact  capital  at  date  period 

FIRST   SECTION. 

1.  Geoss  Earnings  Since  Last  Report. — This  should  represent  the 
total  of  gross  profits  from  all  sources  earned  during  the  dividend  period 
covered  by  the  report,  such  as  discount,  interest,  exchange,  rents,  etc., 
but  no  part  of  undivided  profits  earned  during  former  periods  should 
be  included  in  this  item. 

2.  Losses  Recovered  Since  Last  Report  (if  any). — This  item  re- 
quires no  explanation.  Any  profits  realized  which  the  bank  desires  to 
show  separately  can  be  entered  specially  after  the  item. 

Add  these  two  items  together,  and  from  their  sum  deduct  the  follow- 
ing: 

3.  Premiums  on  Bonds  Charged  Off  Since  Last  Report. — In  case  of 
any  decrease  in  the  market  value  of  any  United  States  bonds  owned  by 
the  bank  occurring  during  the  dividend  period,  such  decrease  should  be 
charged  off  on  the  books  of  the  bank  and  the  amount  entered  here. 

4.  Losses  Sustained  Through  Bad  Debts,  Decrease  of  Values,  etc., 
Since  Last  Report. — Any  losses  sustained  on  "  loans  and  discounts  '* 
during  the  dividend  period,  and  any  decrease  in  the  value  of  banking 
house,  furniture  and  fixtures,  other  real  estate,  securities  of  any  kind 
owned  by  the  bank,  and  the  amount  of  any  bad  debts,  as  defined  by  sec- 
tion 5204,  should  be  included  here. 

5.  Expenses  and  Taxes  Paid  Since  Last  Report. — Enter  here  the 
sum  of  all  expenses  and  taxes  paid  since  last  report,  whether  they  have 
been  charged  off  or  not. 

The  sum  of  items  3,  4  and  5  should  be  deducted  from  the  sum  of 
items  1  and  2,  and  the  result  will  be  item  6,  which,  added  to  3,  4  and  5, 
will  of  course  always  equal  the  total  of  1  and  2. 

6.  Net  Earnin<3S  and  Profits  or  Loss  of  Past  Six  Months  (or  of 
dividend  period,  if  less  than  six  months). — This  represents  the  net 
profits  remaining  after  deducting  the  sum  of  all  items  of  "  outgo  "  for 
the  dividend  period  from  the  sum  of  the  items  of  "  income  "  during  the 


290 


same  period.  If  the  "  outgo  "  has  exceeded  the  "  income,"  the  result 
will  be  a  "  net  loss,"  and  the  figures  representing  such  loss  should  he 
entered  in  red  ink.  In  this  case  the  printed  words  "  earnings  and 
profits  "  should  be  stricken  out,  leaving  the  word  "  loss  "  against  entry 
and  deducted  from  total  of  items  3,  4  and  5. 

SECOND  SECTION. 

7.  Undivided  Profits  oe  Loss  Brought  Fobward  from  Last  Report. — 
Enter  here  the  balance  of  undivided  profits  remaining  on  hand  at  end 
of  the  previous  dividend  period,  namely,  the  amount  entered  at  item 
14  or  20  of  the  last  report.  Should  this  item  represent  a  loss,  instead  of 
a  profit,  the  figures  should  be  entered  in  red  ink.  This  item  should  al- 
ways be  brought  forward  in  full  and  no  part  of  it  included  in  the  first 
section  of  report. 

Should  the  bank  have  been  converted  from  some  other  organization, 
the  profits  on  hand  at  date  of  conversion  should  be  entered  here  as  well 
as  under  item  17. 

8.  Amount  Withdrawn  from  Surplus  (if  any). — Enter  amount  in 
case  there  has  been  withdrawal  from  this  fund.  It  should  be  borne  in 
mind  that,  so  long  as  surplus  is  below  the  required  20  per  cent,  no  por- 
tion of  it  can  be  withdrawn,  except  for  the  purpose  of  charging  off 
losses  incurred,  and  no  more  than  will  meet  the  losses,  and  then  only 
after  any  "  undivided  profits  "  on  hand  have  first  been  exhausted.  When 
the  surplus  exceeds  the  limit  of  20  per  cent,  the  excess  over  this  limit 
may  be  used  for  the  payment  of  dividends  or  otherwise,  as  the  bank 
may  elect. 

The  sum  of  items  12,  13  and  14  should  always  balance  with  items 
6  to  11. 

9.  Reduction  of  Capital  Stock  Since  Last  Report  (if  any). — ^Enter 
only  reduction  to  meet  losses  or  passed  to  profit  account.  Reduction  of 
capital  stock  to  return  to  shareholder  forms  no  part  of  this  report. 

10.  Paid  Assessment  on  Capital  Stock  Since  Last  Report  (if  any). 
— Any  assessment  on  capital  paid  in  is  for  the  purpose  of  covering 
losses  shown  in  item  6  and  should  only  be  entered  in  this  item.  Any 
increase  in  capital  does  not  enter  into  this  report. 

11.  Surplus  Subscribed  and  Paid  in  by  Shareholders  Since  Last 
Report  (if  any). — Any  money  subscribed  and  paid  in  by  the  share- 
holders either  as  a  surplus  fund  or  as  a  part  of  the  profit  account 
should  be  entered  as  indicated  in  this  item,  substituting  the  word  "  pro- 
fits "  for  surplus  in  the  latter  case. 

12.  Carried  to  Surplus  Fund  [not  less  than  one-tenth  of  item  6, 
UNLESS  surplus  IS  ALREADY  20  PER  CENT.  OF  CAPITAL) . — Any  amouut  that 
has  been  carried  to  this  fund  in  accordance  with  requirements  of  sec- 


291 

tion  5199.  A  bank  may,  if  it  desires,  carry  more  than  one- tenth  of  its 
net  earnings  for  a  dividend  period  to  this  fund;  but  so  long  as  the 
surplus  fund  is  less  than  20  per  cent,  of  its  capital,  it  must  carry  at 
least  one-tenth  of  its  net  profits  for  any  dividend  period  to  this  fund 
before  it  declares  a  dividend. 

13.  Dividend  of Pee  Cent,  (on  Capital,  $ ). — Enter  here 

the  amount  distributed  to  stockholders  during  the  dividend  period,  tak- 
ing care  to  enter  the  rate  and  the  amount  of  capital  in  the  proper 
blanks. 

14.  Amount  of  Net  Profits  Undivided,  or  Loss  to  Be  Carried  For- 
ward.— Enter  here  the  balance  of  undivided  profits  or  loss  remaining, 
after  deducting  items  12  and  13  from  items  6  to  11. 

THIRD    SECTION 

15.  Total  Profits  as  National  Bank  Since  Organization  (less  ex- 
penses, PREMIUMS,  losses,  ETC.). — The  amount  to  be  entered  here  is 
obtained  by  adding  item  6  of  the  current  dividend  period  to  item  15  of 
the  last  dividend  report  made. 

16.  Add  Profits  and  Surplus  of  Old  Organization  at  Date  oi"  Con- 
version.— This  will  apply  only  in  the  case  of  a  State  bank  converted 
to  a  National  bank  which  had  a  balance  of  profits  on  hand  at  time  of 
conversion.  This  balance,  of  course,  remains  unchanged,  and  must  be 
the  same  in  every  report. 

17.  Total  Paid  in  by  Shareholders  and  Reduction  of  Capital  Used 
TO  Meet  Losses  and  Passed  to  Profits. — This  item  should  include 
items  9,  10  and  11  added  to  item  17  of  last  report. 

18.  Total  Surplus  Fund  Proper  at  Date  of  this  Report. — This  is 
obtained  by  adding  the  amount  carried  to  surplus  fund  during  the  cur- 
rent dividend  period  (item  12),  if  any,  to  item  18  of  the  last  report 
made. 

19.  Total  Dividend  Since  Organization  as  National  Bank. — This  is 
obtained  by  adding  the  amount  of  any  dividend  declared  during  the  cur- 
rent period  (item  13)  to  item  19  of  the  last  report  made. 

20.  Amount  of  Net  Profits  Undivided  or  Loss,  etc.  (same  as  item 
14  OF  this  report). — This,  like  item  14,  represents  the  balance  of  "  undi- 
vided profits  "  or  loss  remaining  at  the  close  of  the  current  dividend 
period. 

The  sum  of  items  18,  19  and  20  should  exactly  equal  and  balance 
the  sum  of  items  15,  16  and  17. 


292 


GENERAL   INFORMATION. 

There  are  three  classes  of  money  which  may  come  into  the  bank:  1st 
(item  15),  total  profits  as  a  National  bank;  2d  (item  16),  profits 
brought  into  the  bank  from  a  converted  association,  and  3d  (item  17), 
money  which  was  not  earned,  but  was  paid  into  the  bank  for  special 
reasons. 

The  dividend  report  must  be  signed  either  by  the  president  or  the 
cashier  of  the  bank.  No  other  officer  of  the  bank  is  authorized  by  law 
to  sign  it.  The  oath  of  the  oflBicer  signing  may  be  made  before  any 
officer  qualified  to  administer  an  oath  and  aflix  a  seal.  An  exact  copy 
of  each  dividend  report  made  to  the  Comptroller  should  always  be  re- 
tained by  the  bank  on  the  extra  blank  furnished  for  this  purpose. 
Each  bank  is  allowed  to  select  its  semi-annual  dividend  periods,  and 
must  render  a  report  of  its  earnings  or  loss  for  that  period,  whether  it 
has  declared  a  dividend  or  not.  The  law  requires  that  whenever  a 
dividend  is  declared  by  a  bank,  whether  semi-annually  or  oftener,  the 
report  of  same  must  be  forwarded  to  the  Comptroller  within  ten  days 
after  declaring  the  dividend.  (Section  5212.)  Section  5213  pre- 
scribes a  penalty  for  failure  to  forward  the  dividend  report  within  the 
required  time. 

Section  1  deals  only  with  the  profits  realized  and  losses  sustained 
during  the  period  being  reported,  or  since  last  report.  No  part  of  the 
profits  earned  or  losses  sustained,  which  have  been  previously  reported 
(except  as  indicated  in  item  2)  are  to  be  included  in  this  section.  See 
that  each  section  balances. 

Section  2  deals  only  with  the  net  profits  (or  loss)  of  current  period 
and  the  undivided  profits  of  previous  periods,  or  losses,  if  any  (item  14 
of  last  report) ;  and  any  amounts  which  may  have  been  withdrawn 
from  surplus  fund,  or  obtained  from  sources  other  than  through  the 
earning  capacity  of  the  bank,  and  the  disposition  of  such  amounts. 

Section  3  deals  only  with  the  total  money  received  from  all  sources 
and  its  distribution  into  surplus  fund,  dividends  declared,  and  un- 
divided profits  on  hand. 

Only  amounts  representing  losses,  expenses,  depreciations  in  value, 
etc.,  should  be  charged  off  in  the  first  section  of  the  report.  If  any 
portion  of  the  profits  have  been  set  aside  in  a  special  fund,  this  should 
be  shown  as  a  special  item  in  the  second  section  of  the  report  under 
item  14,  and  as  a  special  item  in  the  third  section  under  item  18  and 
should  be  included  in  the  total  shown  as  item  15  of  the  same  section. 
Any  amounts  added  to  or  deducted  from  a  special  fund  should  be 
shown  in  the  second  section,  the  amount  shown  in  the  third  section  to 
always  be  the  exact  amount  of  the  fund  when  the  report  is  made.  Any 
amount  withdrawn  from  this  fund  should  be  shown  as  item  8  of  the 
second  section,  changing  the  word  surplus  to  the  title  of  the  special 
account,  and  any  amounts  added  to  the  fund  should  be  shown  as  above 
indicated  under  item  14. 


293 

The  fact  that  profits  on  hand  from  a  previous  period  have  been  used 
to  provide  for  losses  during  the  period  does  not  warrant  adding  such 
profits  to  earnings  of  the  period  in  the  first  section,  for  if  this  is  done 
the  item  of  total  profits  in  the  third  section  will  show  more  profits  than 
have  actually  been  realized  by  the  amount  thus  added.  Earnings  on 
hand  from  a  previous  period  should  always  appear  as  item  7  of  second 
section,  and  added  to  the  total  earnings  of  the  period  less  the  total 
amounts  charged  off  will  show  the  actual  amount  of  profits  remaining 
on  hand  after  deducting  the  dividends,  etc.,  to  be  entered  as  item  14, 

Where  an  increase  of  capital  stock  is  sold  for  more  than  its  par  value, 
the  excess  should  be  included  with  profits  in  the  first  section  of  the 
report  or  entered  as  a  special  item  in  the  first  section  as  "  Profits  on  ac- 
count of  increase  of  capital  stock." 

A  sworn  report  of  any  dividend  declared  is  required  by  law  within 
ten  days  from  date  of  declaration,  and  a  statement  by  letter  that  a 
dividend  has  been  declared  is  not  suflicient,  whether  declared  at  the 
regular  dividend  dates  or  at  intervening  times. 

If  a  dividend  is  not  declared  until  a  few  days  after  the  termination 
of  a  dividend  period,  it  should  be  included  in  the  report  for  the  period, 
as  it  shows  the  disposition  made  of  the  earnings  of  the  period,  and  the 
date  of  declaration  in  the  heading  of  the  report  indicates  that  its 
declaration  was  delayed. 

The  fact  that  two  or  more  dividends  may  be  declared  on  one  date, 
payable  at  two  or  more  dates  in  the  future,  does  not  relieve  the  bank 
from  reporting  the  entire  dividends  declared  within  ten  days  from  the 
date  of  declaration,  and  the  dates  when  the  dividends  are  payable  does 
not  govern  in  this  matter. 

This  report  is  to  be  made  semi-annually  to  the  Comptroller  of  the 
Currency.  If  no  dividend  has  been  declared,  the  report  is  still  required, 
showing  the  earnings  of  the  bank  and  the  disposition  of  the  same. 


LAWFUL  MONEY  EESERVE  OF  NATIONAL  BANKS. 

Reserve  requirements. 

Begnilations. 

Computation. 

The  National  baiik  act  requires  that  National  banks  shall  main- 
tain a  reserve  to  protect  deposits.  The  law  bearing  on  the  subject  is 
found  in  sections  5191,  5192  and  5195  of  the  Kevised  Statutes,  as 
modified  by  section  2,  part  of  section  3  of  the  act  of  June  20,  1874; 
part  of  section  12  of  July  12,  1882,  the  act  of  March  3,  1887,  the 
act  of  July  14, 1890,  and  act  of  March  14, 1900. 

Classification  of  Banks  as  to  Resebve. — The  law  divides  the  banks 
into  three  classes,  as  to  reserve  required,  according  to  location: 

1st.  Central  Reserve  City  Banks  : — Section  5195  and  act  of  March 
3,  1887,  designate  certain  cities  "  Central  Reserve  Cities,"  viz.  :  New 
York,  Chicago  and  St.  Louis,  each  bank  in  which  is  required  to  keep  a 
reserve  equal  to  twenty-five  per  cent,  of  its  deposits,  and  this  reserve  to 
be  in  the  bank's  own  vaults. 

2d.  Reserve  City  Banks. — Section  5191  names  sixteen  cities,  in- 
cluding the  preceding,  which  are  called  "  Reserve  Cities,"  in  which 
each  bank  is  required  to  keep  a  reserve  equal  to  twenty-five  per  cent, 
of  its  deposits,  and  to  these,  under  the  act  of  March  3,  1887,  have  been 

added  other  cities  (see  full  list,  page ) ;  but  the  banks  in  reserve 

cities  outside  of  Central  reserve  cities  are  allowed  to  keep  one-half  of 
their  lawful  reserve  with  National  banks,  approved  by  the  Comptroller 
of  the  Currency,  in  Central  reserve  cities. 

3d.  Banks  not  in  Reserve  Cities.— Section  5191  further  provides 
that  each  bank  located  elsewhere  than  in  a  Reserve  city  must  keep  a  re- 
serve equal  to  fifteen  per  cent,  of  its  deposits,  and  section  5192  provides 
that  three-fifths  of  this  reserve  may  consist  of  balances,  due  the  bank, 
from  banks  approved  by  the  Comptroller  of  the  Currency,  in  any  of  the 
Reserve  cities,  the  other  two-fifths  to  be  in  bank. 

Reserve  Required  on  Deposits  Only. — Since  the  passage  of  the  act 
of  June  20,  1874,  the  only  reserve  required  is  a  certain  percentage  of  the 
aggregate  deposits. 

No  reserve  is  required  on  Government  deposits.  The  Secretary  of 
the  Treasury  and  the  Comptroller  of  the  Currency  are  given  certain  dis- 
cretionary power  under  section  5191  R  .S.  and  have  waived  the  require- 
ment on  such  deposits. 

294 


295 

General  a?td  Individual  Deposits. — Reserve  is  io  be  computed 
on  all  deposits  which  appear  on  the  balanced  statement  of  the 
bank,  and  for  purposes  of  computing  the  reserve  required,  deposits 
are  divided  into  two  classes.  General  Deposits  and  Bank  Deposits. 
The  first  consists  of  the  following:  "  Individual  deposits,"  in- 
cluding "  deposits  subject  to  check,"  "  demand  certificates  of  checks 
outstanding"  or  other  like  evidence  of  deposit;  "dividends  un- 
paid;" and  "deposits  of  United  States  disbursing  officers."  By  "bank 
deposits "  is  meant  the  total  balance  due  National  banks  and  other 
banks  and  bankers  after  deducting  amounts  due  from  such  banks.  In 
making  such  deductions,  net  balances  with  approved  agents,  are  not 
to  be  deducted  from  the  amounts  due  to  banks,  as  a  certain  portion  of 
such  deposits  may  be  counted  as  part  of  the  reserve,  so  cannot  be  used 
also  to  offset  liability,  but  any  excess  with  approved  agents  above  the 
proportion  of  reserve  allowed  to  be  with  them  can  be  utilized,  when 
ascertained^  to  reduce  balance  due  to  banks. 

Deductions  Allowed. — Certain  deductions  are  allowed  to  be  made 
from  the  general  deposits,  viz.,  exchanges  for  clearing-house,  checks 
on  other  banks  in  same  place,  National  bank  notes  of  other  banks  and 
amount  due  from  United  States  Treasurer  other  than  the  5  per 
cent.  fund. 

General  P^nds  Available  for  Reserve. — The  funds  available  for  re- 
serve in  bank  are  comprised:  First.  Under  the  general  term  lawful 
money,  which  has  been  held  to  mean  gold  coin  of  the  United  States, 
silver  dollars,  fractional  silver  coin,  and  legal  tender  notes  and 
Treasury  notes  of  July  14,  1890.  By  special  statute,  clearing-house 
certificates  are  also  available  for  reserve.  (Section  5192,  Revised 
Statutes.)  In  the  same  way  are  available  United  States  gold  and  silver 
certificates  (Section  12  of  the  act  of  July  12,  1882)  and  gold  certificates 
payable  to  order  (act  March  14,  1900.) 

Five  Per  Cent.  Fund  Set-off  : — Section  3  of  the  act  of  June  20,  1874,  y 
requiring  that  each  National  bank  be  required  to  keep  at  all  times  with 
the  Treasurer  of  the  United  States,  in  lawful  money,  a  sum  equal  to 
five  per  cent,  of  its  circulation,  also  provides  that  this  five  per  cent,  fund 
may  be  counted  as  reserve  on  deposits,  but  no  surplus  in  this  fund 
above  five  per  cent,  of  circulation  can  be  thus  counted. 

COMPUTING  THE  RESERVE. 

The  computation  of  the  reserve  is  a  simple  matter.  The  bank  act  as 
amended  states,  it  is  to  be  either  twenty-five  per  cent,  or  fifteen  per 
cent,  (according  to  a  bank's  location)  of  the  "  aggregate  deposits;  " 
what  is  comprised  in  these  is  given  in  detail,  in  the  form  furnished  by 
the  Comptroller  of  the  Currency;  bank  deposits  are  included,  but  these 


296 

need  to  be  ascertained  separately  :  if  the  reciprocal  accounts  show  a 
net  balance  due  from  banks,  it  must  be  omitted  from  the  calculation, 
but  if  there  is  shown  a  balance  due  to  banks  this  amount  is  to  be  added 
to  the  other  deposits.  [Should  the  amounts  due  from  exceed  the 
amounts  due  to  banks,  such  an  excess  cannot  be  considered  as  decreas- 
ing the  liability  for  other  deposits,  as  amounts  due  from  can  only  be 
used  to  offset  liability  for  amounts  due  to  banks.]  From  the  total  de- 
posits certain  specified  items  are  allowed  to  be  deducted;  then  as  the 
five  per  cent,  fund  with  the  U.  S.  Treasurer  is  allowed  to  be  counted  as 
reserve,  the  amount  of  deposits  that  the  fund  will  cover  (i.  c,  four  or 
six  and  two-third  times  the  fund,  according  to  location)  is  to  be  sub- 
tracted, thus  is  ascertained  the  net  amount  of  deposits  requiring  re- 
serve, then  twenty-five  per  cent,  or  fifteen  per  cent,  of  this  remainder  is 
the  reserve  required,  and  one-half  or  two-fifths  of  this  according  to  loca- 
tion must  be  in  bank,  more  or  all  of  it  may  he,  tut  so  much  must  te; 
the  balance  may  be  with  reserve  agents  (i.  e.,  one-half  or  three-fifths 
of  the  amount).  If  it  is  seen  that  there  is  a  larger  amount  with  re- 
serve agents  than  the  one-half  or  three-fifths  allowed  to  count  as  re- 
serve, this  surplus  or  excess  cannot  be  counted  as  reserve,  but  may  be 
treated  as  due  from  banks  and  deducted  from  the  balance  due  to  banks 
(if  there  is  a  balance  due  to  banks  to  offset),  thus  the  total  deposits  on 
which  the  reserve  is  required  will  be  decreased,  making  the  reserve 
requirement  less,  which  is  sometimes  an  object.  A  short  method  of 
utilizing  this  surplus  is  given  in  our  rules,  otherwise  the  operation  is 
quite  long,  for,  after  the  surplus  with  reserve  agents  (found  by  the 
first  calculation)  is  applied  to  reduce  the  amount  due  to  banks,  the  total 
deposit  requiring  reserve  is  also  reduced,  hence  the  amount  allowed 
with  reserve  agents  as  reserve  is  made  less,  so  a  further  surplus  with 
reserve  agents  is  developed;  this,  in  turn,  is  applied  to  reduce  amount 
due  to  banks,  and  the  reduction  lessens  again  the  total  deposits  requir- 
ing reserve,  so  also  lessening  again  the  amount  allowed  with  reserve 
agents  as  reserve  :  thus  another  surplus  is  developed,  which  is  applied, 
as  the  preceding,  and  this  operation  repeated  until  only  the  exact  pro- 
portion of  reserve  allowed  with  agents  is  reached,  and  thus  the  entire 
surplus  or  excess  with  reserve  agents  is  utilized,  to  reduce  the  ag- 
gregate deposits,  and  so  the  reserve  required;  the  short  method  given 
in  our  rules  avoids  this  long  operation. 

If  will  be  seen  that  the  only  item  requiring  special  attention  is  the 
surplus  with  reserve  agents  above  the  amount  of  reserve  allowed  to  be 
with  them,  and  this  needs  to  be  considered  only  when  the  home  reserve 
is  short,  requiring  the  excess  m  be  utilized,  to  reduce  the  amount  of  re- 
serve required,  but,  as  before  stated,  there  must  be  a  balance  due  to 
banks  to  make  it  possible  to  utilize  such  excess  or  any  portion  of  it. 


RULES  FOR  COMPUTING  RESERVE. 

For  Examples  see  pages . 

^he  following  seven  rules  probably  cover  all  cases  that  may  arise  : 
For  items  comprising  general  deposits  see  examples  following. 

1.  For  banks  located  in  Central  Reserve  Cities. 

Rule  : — Obtain  the  total  of  general  deposits,  deduct  exchanges  for 
clearing-house,  checks  on  other  banks  in  same  place  and  National  bank 
notes  of  other  banks;  then  deduct  amount  due  from  banks  from 
amounts  due  to  banks,  and  the  remainder,  if  a  balance  due  to  banks, 
add  to  the  net  general  deposits,  and  deduct  from  the  total  four  times 
the  five  per  cent,  redemption  fund,  twenty-five  per  cent,  of  the  re- 
mainder is  the  required  reserve  which  must  all  be  in  bank  in  one  of  the 
forms  of  lawful  money  or  certificates  available  for  reserve  heretofore 
described. 

In  making  calculations  let  it  be  remembered  that  if  amounts  due 
from  banks  equal  or  exceed  amounts  due  to  banks,  both  amounts  must 
be  omitted  from  the  computation. 

That  four  times  the  5  per  cent,  fund  is  deducted  as  the  amount  of 
deposits  covered  by  it. 

If  reciprocal  accounts  are  kept,  then  by  the  whole  amount  is  meant 
the  net  balance  due  from  the  agents. 

2.  For  banks  located  in  Reserve  Cities  other  than  Central  Reserve 
Cities,  where  there  is  no  excess  with  approved  reserve  agents  in  Cen- 
tral Reserve  Cities. 

Rule  : — Obtain  the  total  of  general  deposits,  deduct  exchanges  for 
clearing-house,  checks  on  other  banks  in  same  place.  National  bank 
notes  of  other  banks  and  amount  due  from  U.  S.  Treasurer  other  than 
the  5  per  cent  fund;  then  deduct  amount  due  from  banks  from  amount 
due  to  banks,  and  the  remainder,  if  a  balance  due  to  banks,  add  to  the 
general  deposits  and  deduct  from  total,  four  times  the  five  per  cent, 
redemption  fund,  twenty-five  per  cent,  of  the  remainder  is  the  required 
reserve;  one-half  at  least  of  this  must  be  in  bank;  the  remaining  half 
may  be  with  approved  reserve  agents.  There  is  no  limit  on  the  amount 
of  the  reserve  which  may  be  kept  in  bank. 

3.  For  banks  located  in  Reserve  Cities  other  than  Central  Reserve 
Cities,  when  evidently  the  home  reserve  is  close  and  there  is  an  excess 
over  the  permitted  one-half  held  with  reserve  agents,  and  when  the 
amounts  due  to  banks  are  so  large  that  it  is  apparent  they  will  exceed 
all  amounts  due  from  banks,  even  including  all  excess  with  reserve 
agents. 

Rule: — Obtain  the  total  of  general  deposits,  deduct  exchanges  for  the 
clearing-house,  checks  on  other  banks  in  the  same  place.  National  bank 
notes  of  other  banks  and  amount  due  from  U.  S.  Treasurer  other  than 
the  5  per  cent,  fund;  then  deduct  amount  due  from  banks  from  amounts 
due  to  banks,  and  the  remainder,  if  a  balance  due  to  banks,  add  to  the 


298 


net  general  deposits  and  deduct  from  the  total,  four  times  the  five  per 
cent,  redemption  fund,  from  the  result  take  the  whole  amount  due  from 
reserve  agents.  One-seventh  of  the  remainder  will  be  the  exact  reserve 
required  at  home. 

This  short  method  of  applying  the  excess  with  the  reserve  agents  to 
reduce  the  reserve  required  at  home  is  based  on  the  known  ratio  of  the 
reserve  required  at  home  to  deposits — in  this  case  (of  25  per  cent 
banks)  it  is  one-eighth.  What  is  wanted  is  to  apply  the  excess  with  re- 
serve agents  to  reduce  reserve  liability  on  deposits,  and  it  is  evident 
in  deducting  the  entire  balance  with  reserve  agents  from  the  deposits 
requiring  reserve  there  is  left  seven-eighths  of  the  final  net  deposits 
[i.  e.,  of  the  final  net  amount  which  will  require  reserve],  since  in  the 
deposits  ascertained  are  two  quantities,  eight-eighths  of  the  final  net 
deposits  and  eight-eighths  of  an  amount  to  be  offset  by  the  eight-eighths 
of  excess  with  reserve  agents;  and  in  the  reserve  agents'  balance  is  two 
quantities,  one-eighth  of  the  amount  of  final  net  deposits  and  the  eight- 
eighths  of  excess,  so  the  total  balance  with  agents  being  subtracted, 
there  remains  seven-eighths  of  the  final  net  deposits,  and  one-seventh 
of  this  remainder  is  one-eighth,  which  is  the  amount  of  reserve  required 
at  home. 

4.  For  banks  located  in  Reserve  Cities  other  than  Central  Reserve 
Cities  where  evidently  the  home  reserve  is  close,  and  there  is  an  excess 
over  the  permitted  one-half  with  the  reserve  agents,  and  when  the 
total  of  amounts  due  to  banks  exceeds  the  total  of  amounts  due  from 
banks,  but  not  so  largely  as  to  plainly  show  that  it  will  exceed  the  total 
due  from  banks  plus  the  excess  over  amount  allowed  as  reserve  with 
the  reserve  agents. 

Rule: — Obtain  the  total  of  general  deposits,  deduct  exchanges  for  the 
clearing-house,  checks  on  other  banks  in  same  place,  National  bank 
notes  of  other  banks  and  amount  due  from  U.  S.  Treasurer  other  than 
the  5  per  cent,  fund;  then  deduct  amount  due  from  banks  from  amounts 
due  to  banks,  and  the  remainder,  if  a  balance  due  to  banks,  add  to  the 
general  net  deposits  and  deduct  from  the  total  four  times  the  five  per 
cent,  redemption  fund.  Take  one-eighth  of  the  remainder,  subtract  this 
from  the  total  balance  due  the  reserve  agents,  and  the  remainder  equals 
seven-eighths  of  the  total  excess  with  reserve  agents,  and  by  adding  one- 
seventh  of  this  amount  to  it  we  have  the  full  excess  available  to  apply 
against  bank  deposits  (i.  e.,  against  the  net  amount  due  to  banks) ;  if 
this  excess  equals  or  is  less  than  the  balance  due  to  banks,  then  the 
whole  can  be  applied,  and  this  is  done  by  taking  one-eighth  of  the  excess 
and  deducting  it  from  the  deficiency  in  home  reserve  (the  proportion  of 
the  excess  available  for  this  purpose),  thus  reducing  or  perhaps  can- 
celling it).  Having  ascertained  what  seven-eighths  of  the  excess  is, 
often  it  is  apparent  that  the  total  excess  is  less  than  net  balance  due 
banks,  and  so  one-seventh  of  the  seven-eighths  (which  is  one-eighth  of 
total)  is  at  once  seen  to  be  the  amount  to  apply. 


299 

If  the  excess  Is  found  to  be  larger  than  the  net  balance  due  to  banks, 
then,  instead  of  one-eighth  of  the  excess,  one-eighth  of  the  amount  of 
balance  due  to  banks  only  can  be  applied  to  reduce  the  deficiency  in 
home  reserve,  as  the  use  of  the  excess  is  limited  by  the  amount  of  such 
balance. 

This  short  method  of  applying  the  excess  is  the  same  principle  as  in 
the  preceding  rule;  we  ascertain  readily  what  seven-eighths  of  the  ex- 
cess with  the  reserve  agents  is,  that  is,  one-eighth  of  the  deposits  ascer- 
tained contains  two  quantities,  viz.  :  one-eighth  of  the  net  deposits,  i.  e., 
of  the  final  net  amount  on  which  the  reserve  is  required,  and  one-eighth 
of  an  amount  which  is  to  be  offset  by  the  excess  with  reserve  agents — 
on  the  other  hand,  the  net  balance  of  reserve  agents  contains  two  quan- 
tities, viz.  :  one-eighth  of  final  net  amount  on  which  reserve  is  required, 
and  the  full  eight-eighths  of  the  excess,  so  by  subtracting  there  is  left 
seven-eighths  of  the  excess,  and  by  adding  one-seventh  of  this  amount 
to  it  we  have  the  full  eight-eighths  that  can  be  applied  to  reduce  the 
reserve  required,  and  one-eighth  of  this  (or  what  is  the  same,  one- 
seventh  of  the  seven-eighths)  is  the  proportion  that  can  be  applied  on 
home  reserve. 

5.  For  banks  not  in  Reserve  Cities  when  there  is  no  excess  with  ap- 
proved reserve  agents. 

Rule  : — Obtain  the  total  of  general  deposits,  deduct  exchanges  for 
clearing-house,  checks  on  other  banks  in  same  place,  National  bank 
notes  of  other  banks  and  amount  due  from  U.  S.  Treasurer  other  than 
the  5  per  cent,  fund;  then  deduct  amounts  due  from  banks  from 
amounts  due  to  banks,  and  the  remainder,  if  a  balance  due  to  banks, 
add  to  the  net  general  deposits  and  deduct  from  the  total  six  and  two- 
third  times  the  five  per  cent,  redemption  fund;  fifteen  per  cent,  of  the 
remainder  is  the  required  reserve.  Two-fifths  at  least  of  this  must  be 
in  bank,  the  remaining  three-fifths  may  be  with  approved  reserve 
agents.  There  is  no  limit  as  to  the  amount  of  the  reserve  which  may 
be  kept  in  bank. 

6.  For  banks  not  in  Reserve  Cities  when  evidently  the  home  reserve 
Is  close,  and  there  is  an  excess  over  the  permitted  three-fifths  with  the 
reserve  agents,  and  when  the  amounts  due  to  banks  are  so  large  that  it 
is  apparent  that  the  excess  with  reserve  agents,  added  to  the  amounts 
due  from  banks,  will  not  exceed  amounts  due  to  banks. 

Rule  : — Obtain  the  total  of  general  deposits,  deduct  exchanges  for 
clearing-house,  checks  on  banks  in  same  place,  National  bank  notes  of 
other  banks  and  amount  due  from  U.  S.  Treasurer  other  than  the  5  per 
cent,  fund;  then  deduct  amount  due  from  banks  from  amounts  due  to 
banks,  and  the  remainder,  if  a  balance  due  to  banks,  add  to  the  net 
general  deposits  and  deduct  from  the  total  six  and  two-third  times  the 
five  per  cent,  redemption  fund;  from  the  remainder  take  the  whole 
amount  with  approved  reserve  agents,  and  six  ninety-firsts,  or,  ap- 
proximately, one  fifteenth  of  the  result  is  the  exact  home  reserve  re- 
quired. 


soo 

This  short  method  of  ascertaining  the  home  reserve  is  similar  to  that 
given  in  Rule  3;  in  deducting  the  entire  balance  with  reserve  agents 
from  the  deposits  ascertained,  ninety-one  one-hundredths  of  the  net  de- 
posits remain,  since  in  the  deposits  are  two  quantities,  viz.  :  one  hun- 
dred one-hundredths  of  the  final  net  deposits  requiring  reserve,  and  one 
hundred  one-hundredths  of  an  amount  to  be  offset  by  the  excess  with 
reserve  agents;  on  the  other  hand,  in  the  reserve  agents'  balance  are 
two  quantities,  viz.  :  nine  one-hundredths  (three-fifths  of  fifteen  per 
cent.)  of  final  net  deposits,  and  one  hundred  one-hundredths  of  the 
excess,  and  by  subtracting  the  latter  from  the  former  ninety-one  one- 
hundredths  of  the  final  net  deposits  remain,  and  six  ninety-firsts  of 
this  is  six  per  cent,  [two-fifths  of  fifteen  per  cent.],  the  reserve  required 
at  home. 

7.  For  banks  not  in  Reserve  Cities  when  the  home  reserve  is  close, 
and  there  is  an  excess  over  the  permitted  three-fifths  with  the  reserve 
agents  and  when  the  total  of  amounts  due  to  banks  exceeds  the  total  of 
amounts  due  from  banks,  but  not  so  largely  as  to  plainly  show  that  it 
will  exceed  the  total  due  from  banks  plus  the  full  surplus  with  re- 
serve agents. 

Rule  : — Obtain  the  total  of  general  deposits,  deduct  exchanges  for 
the  clearing-house  checks  on  other  banks  in  the  same  place,  National 
bank  notes  for  other  banks  and  amount  due  from  U.  S.  Treasurer  other 
than  the  5  per  cent,  fund;  then  deduct  amount  due  from  banks  from 
amounts  due  to  banks;  and  the  remainder,  if  a  balance  due  to  banks, 
add  to  the  general  net  deposits,  and  deduct  from  the  total  six  and  two- 
thirds  times  the  five  per  cent,  redemption  fund;  take  nine  per  cent,  of 
this  amount  (i.  e.,  three-fifths  of  fifteen  per  cent.)  and  subtract  it  from 
the  total  balance  with  reserve  agents,  the  remainder  will  be  ninety-one 
one-hundredths  of  the  excess  with  reserve  agents,  available  to  reduce 
reserve  liability  on  deposits,  and  by  finding  and  adding  nine  one-hun- 
dredths, or  say  one-tenth  of  the  ninety-one  one-hundredths  to  this 
amount,  the  total  excess  is  obtained;  if  this  excess  is  equal  to  or  less 
than  the  balance  due  to  banks,  then  the  whole  can  be  utilized  and  the 
proportion  available  to  apply  on  home  reserve  is  found  by  taking  six 
per  cent,  of  the  excess  (i.  e.,  two-fifths  of  fifteen  per  cent.)  and  deduct- 
ing it  from  the  amount  of  deficiency  in  home  reserve,  thus  reducing  or 
perhaps  cancelling  it  If  the  excess  is  greater  than  the  balance  due  to 
banks,  then  instead  of  six  per  cent,  of  the  excess  six  per  cent,  of  the 
amount  of  balance  due  to  banks  only  can  be  applied  to  reduce  the  de- 
ficiency in  home  reserve,  as  the  use  of  the  excess  is  limited  by  the 
amount  of  such  balance. 

The  explanation  of  this  short  metliod  is  similar  to  that  given  in 
Rule  IV.  By  subtracting  nine  per  cent.  (i.  e.,  three-fifths  of  fifteen  per 
cent.)  of  the  net  deposits  from  the  total  balance  with  reserve  agents, 
the  remainder  is  equal  to  ninety-one  one-hundredths  of  the  excess  with 
reserve  agents,  since  in  the  balance  with  reserve  agents  are  two  quanti- 


301 

ties,  the  nine  per  cent,  of  the  final  net  deposits  and  the  full  one  hun- 
dred one-hundredths  of  the  excess  with  said  agents,  and  in  the  nine 
per  cent,  of  the  deposits  is  the  nine  per  cent,  of  the  final  net  deposits 
and  nine  one-hundredths  of  an  amount  which  may  be  offset  by  an  equal 
amount  of  excess  with  reserve  agents,  so  by  subtracting  there  is  left 
ninety-one  one-hundredths  of  the  amount  of  excess,  and  then  by  finding 
and  adding  nine  one-hundredths  we  ascertain  the  total  excess  to  be  ap- 
plied, or  it  is  suflaciently  close  to  add  one-tenth  of  the  ninety-one  one- 
hundredths. 

AVERAGE  RESERVE. 

The  Comptroller  of  the  Currency  requires  that  in  each  report  of  con- 
dition of  bank  called  for  by  him  there  shall  be  a  statement  of  its 
average  reserve  on  deposits  for  the  preceding  thirty  days.  The 
average  reserve  for  this  or  any  other  period  may  be  ascertained  by 
finding  the  net  deposits  requiring  reserve  for  each  day  in  that  period, 
and  adding  the  results  together  for  a  divisor.  In  the  same  way  the  re- 
serves held  on  the  same  days  should  be  added  together  for  a  dividend. 
The  quotient  will  be  the  percentage  of  average  reserve  for  the  period, 
or  take  the  percentage  of  reserve  for  each  business  day  for  the  period, 
and  divide  the  total  by  the  number  of  such  days.  To  obtain  this 
average  reserve  a  daily  and  exact  record  of  the  amount  of  each  kind  of 
currency  must  be  kept,  and  in  assorting  the  cash.  National  bank  notes 
should  be  separated,  and  from  these  the  notes  of  the  bank's  own  issue. 
A  record  should  also  be  kept  of  daily  net  balances  of  the  various  kinds 
of  deposits,  and  on  the  other  hand  of  the  five  per  cent,  fund,  the  cash 
reserve  in  bank  and  the  amount  of  balance  with  reserve  agents  not  ex- 
ceeding the  one-half  or  three-fifths  of  reserve  allowed  with  them. 

APPROVED  RESERVE  AGENTS. 

Any  bank  outside  of  the  reserve  cities  may  select  any  National  banks 
within  any  such  cities  as  depositaries  for  its  funds,  and  such  funds  so 
deposited,  when  the  selection  is  approved  by  the  Comptroller,  are  al- 
lowed to  be  counted  as  a  part  of  the  required  reserve  of  the  depositing 
bank.  In  the  same  way  banks  in  reserve  cities  may  select  for  approved 
agents  banks  in  Central  reserve  cities.  The  bank  making  selection 
writes  to  the  Comptroller  of  the  Currency  for  his  approval  of  the  bank 
or  banks  chosen. 

THE  RESERVE  CITIES. 

Centbal  Reseeve  Cities: 

New  York  City,  Chicago,  St.  Louis. 

Other  Reserve  Cities: 

Boston,  Albany,  Brooklyn,  Philadelphia,  Pittsburg,  Baltimore,  Wash- 
ington, Savannah,  New  Orleans,  Louisville,  Dallas,  Fort  Worth,  Hous- 
ton, Cincinnati,  Cleveland,  Columbus,  Indianapolis,  Detroit,  Milwaukee, 


302 


Cedar  Rapids,  Des  Moines,  Dubuque,  St.  Paul,  Minneapolis,  Kansas 
City,  Kans.,  Wichita,  Kansas  City,  Mo.,  St.  Joseph,  Lincoln,  Omaha, 
Denver,  Salt  Lake  City,  San  Francisco,  Los  Angeles,  Portland,  Ore. 

Richmond  and  Chaeleston,  although  named  in  section  5192  R.  S. 
among  the  cities  wherein  fifteen  per  cent,  banks  are  permitted  to  de- 
posit three-fifths  of  their  reserves,  they  are  not  named  in  section  5191 
R.  S.  among  the  cities  wherein  banks  are  required  to  keep  the  larger 
reserve  of  twenty-five  per  cent.  This  larger  reserve  was  reqlired  princi- 
pally because  of  the  greater  responsibility  incurred  by  receiving  the 
deposit  of  bank  reserves.  The  banks  located  in  Richmond  and  Charles- 
ton were  not  designated  under  section  5191^  and  have  not  since  deemed 
it  advisable  to  be  so  designated. 


303 


Pratts*  Form  for  Computing  the  Lawful  Money  Reserve  of  Banks  in  Reserve  Cities 

Items  on  Which  Reserve  is  Required 

General  Deposits. 
Individual  deposits,  viz : 

Deposits  subject  to  check, — Demand  and  Time 

ctfs..  Cashier's  cks..  Certified  cks.,  &c 

Dividends    unpaid 

Deposits  of  U.  S   Disbursing  Officers 

Less  Deductions  Allowed. 

Exchanges  for  Clearing  House 

Checks  on  other  banks  in  same  place 

National  Bank  Notes  (other  than  own  issue) 

Due  from  the  U.  S.  Treasurer 

Net  General  Deposits 

Sank  Deposits. 

Due  to  National  Banks 

Due  to  State  Banks  and  Bankers 

Less. 

Due  from  National   Banks 

Due  from  State  Banks  and  Bankers 


$■■ 


$.. 


$.. 


'Net  Bank  Deposits  (Net  balance  due  banks  if  any) 

[If  net  balance  is  due  from  banks,  then  there  arc  no  bank  deposits  requiring  reserve,  And  as  such 
balance  cannot  offset  any  other  deposits,  omit  it  entirely,] 

The  sum  is  the  total  Deposits  on  which  reserve  is  required,  viz : 

Deduct  4  times  the  five  per  cent.   (5  ^  )  fund  (i.  e.  the  amount  of  de- 
posits covered  by  this  fund  as  reserve) 

IXet  Deposits  requiring  reserve  is 

26   ji  of  this  is  the  total  Reserve  required,  viz :  |  $ 

Proportion  of  Reserve  to  be  in  bank  is  3^,  viz :  |  $ 

Any  excess  with  Reserve  Agents  above  the  proportion  allowed  to  be  with  them  can  be  counted  as  due 
from  banks,  so  if  the  Home  Reserve  is  short  and  there  is  a  balance  due  banks,  the  excess  with 
Agents  can  be  used  to  lessen  Reserve  required.    The  following  are  short  methods  for  applying  it; — 

Rule  A. — If  the  excess  is  considerably  less  than  the  net  balance  due 
banks,  subtract  from  the  Net  deposits  i  the  entire  net  balance  with  Re- 
serve Agents,  3  viz  : 

One-seventh  of  the  remainder f 

is  the  exact  Reserve  required  to  be  in  banTc,  viz : 

Rttle  B. — If  the  excess  is  evidently  near  the  amount  of  net  balance 

due  banks,2  from  the  net  balance  due  from  Reserve  Agents,^  viz : 

subtract  the  amount  of  Reserve  required  in  bank  as  first  calculated,  viz : 
Increase  the  remainder  by  one-seventh  of  it  (the  remainder)....^ 

This  gives  the  exact  excess  that  can  be  applied,  viz : 

and  is  applied  as  follows  : 

(m.)    If  this  excess  equals  or  is  less  than  the  net  balance  due  banks, 2  the  Home  deficiency  can  be  reduced  by  one- 
eighth  of  the  excess. 

(n.)    If  the  excess  is  greater  than  the  net  balance  due  banks,2  only  an  amount  of  the  excess  equal  to  one-eighth  of 
this  net  balance  can  be  so  used. 

Items  Composing  the  Net  Reserve  and  Distribution  of  the  Same. 


5.. 


One  half  of  the  Net  Reserve  required  Is 
Items  making  up  the  same  may  consist  of* 

Net    Balance    with    approved    Reserve 

Agents,  viz : 


^Total  net  balance. 


tKxoeas  with  Reserve  Agents.... 
Deficiency  with  Reserve  Agents. 


One-half  of  the    Net   Reserve  required  ii 

Items   in    Bank's    possession   to   make   up   the 
same,  viz : 


Gold  Coin 

Gold  Treasury  Certificates 

C.H. Certificates  for  Coin  or  Legal  Tenders 

Silver  Dollars 

Silver  Treasury  Certificates • 

Fractional   Silver 

Legal-Tender    Notes 

U.  S.  Certificates  of  Deposit  for  Legal 
Tenders 


Excess  in  items  held  by  the  Bank 

Deficiency  in  items  held  by  the  Bank. 

Deficiency  in  the  entire  Reserve  held,  $.■ 


Kxcess  In  the  entire  Reserve  held,  $ 

•If  reciprocal  accounts  are  kept  with  reserve  agents,  only  the  net  amount  due  from  such   agents  Is  available 
for  reserve. 

tAny  excess  with  reserve  nccnts  can  not  be  counted  as  reserve,  and  is  available  only  to  reduce  or  cancel  nek 
balance  due  to  banks  and  bankerH. 


304 


$■ 


^... 


Pratts*  Form  for  Computing  the  Lawful  Money  Reserve  of  Banks  not  in  Reserve  Cities. 

Items  on  Which  Reserve  is  Required. 
General  Deposits, 
Individual  deposits,  viz: 

Deposits  subject  to  check, — Demand  and  Time 

ctfs..  Cashiers'  cks..  Certified  cks.,  &c 

Dividends   unpaid 

Deposits  of  U.  S   Disbursing  Officers 

Less  Deductions  Allowed. 

Exchanges  for  Clearing  House 

Checks  on  other  banks  in  same  place 

National  Bank  Notes  (other  than  own  issue) .... 

Due  from  the  U.  S.  Treasurer 

Net  General  Deposits 

Sank  Deposits,  % 

Due  to  National  Banks 

Due  to  State  Banks  and  Bankers 

Less. 

Due  from  National  Banks 

Due  from  State  Banks  and  Bankers 


$■■ 


$... 


$.. 


SNet  Bank  Deposits  (Net  balance  due  banks  if  any) 


[If  net  balance  is  due  from  banks,  then  there  are  no  bank  deposits  requiring  reserre,  and  as  inch 
balance  cannot  offset  any  other  deposits,  omit  it  entirely,] 


The  sum  is  the  total  Deposits  on  which  reserve  is  required,  viz : 

Deduct  6f  times  the  five  per  cent.    (5  ^  )    fund    (i.   e.  the  amount 

deposits  covered  by  this  fund  as  reserve) 

llfet  Deposits  requiring  reserve  is 

16  ^     of  this  is  the  total  Reserve  required,  viz :  |  $ 

Proportion  of  Re  serve  to  be  in  bank  is  |tlis,  viz :  |  $ 


of 


$• 


Any  excess  with  reserve  agents  above  the  proportion  allowed  to  be  with  them  as  reserve  can  be  cminted 
aa  due  from  banks,  so  if  the  Home  reserve  is  short,  and  there  is  a  balance  due  banks,  the  excess  with 
Agents  can  be  used  to  lessen  reserve  required.     The  following  are  short  methods  of  applying  it : — 

Rule  C. — If  the  excess  Is  evidently  considerably  less  than  the  net  bal- 
ance due  banks,  subtract  from  the  net  deposits,^  the  entire  net  balance 

Yrith  Reserve  Agents,^  viz  : 

g\st  or  (unless  exact  amount  is  needed)  approximately  say  ^  of  the  re- 
mainder is  the  Home  Reserve  required,  viz: 

Rule  D. — If  the  excess  is  apparently  near  the  amount  of  net  balance 

due  banks,2  from  the  net  balance  due  from  Reserve  Agents,3  viz : 

Subtract  9  ^    of  the  net  deposits  requiring  Reserve,!  viz : 

Increase  the  remainder  by  yj„  or  say  ^  of  it 

The  total  is  the  exact  excess  that  can  be  applied,  viz : 

and  is  applied  as  follows : 


If  this  excess  equals  or  is  less  than  the  net  balance  due  banks,3  six  per  cent,  of  it  can  be  applied 
to  reduce  Home  deficiency,  but  if  the  excess  is  larger  than  the  net  balance  due  ba&Ju,!  only  aa 
amoont  of  ttaa  excess  equal  to  six  per  cent,  of  a&id  net  balance  can  be  so  applied. 

Items  Composing  the  Net  Reserve  and  Distribution  of  the  Same. 


Three-flfthi  of  the  Net  Reserve  required  it 
Items  making  up  the  same  may  consist  of* 

Net    Balance    with    approved    Reserve 

Agents,  viz : 


'Total  net  balance. 


t Excess  with  Reserve  Agents.. •• 
Deficiency  with  Reserve  Agents. 


Two-fifths  of  the  Net   Reserve  required  is 

Items   in    Bank's   possession   to   make    up   the 
same,  viz : 


Gold  Coin 

Gold  Treasury  Certificates 

C.H. Certificates  for  Coin  or  Legal  Tenders 

Silver  Dollars ■ 

Silver  Treasury  Certificates ■ 

Fractional    Silver 

Legal-Tender    Notes •.••• 

U.  S.  Certificates  of  Deposit   for  Legal 
Tenders 


Excess  in  items  held  by  the  Bank 

Deficiency  in  items  held  by  the  Bank.. 


Excess  in  the  entire  Reserve  held,  $• 


Deficiency  in  the  entire  Reserve  held,  $. 


*If  reciprocal  accounts  are  kept  with  reserve  agents,  only  the  net  amount  due  from  snch   agents  Is  available 
for  reserve. 

tAny  excess  with  reserve  agents  can  not  be  counted  as  reserve,  and  is  ftTaiUhle  only  to  reduce  of  cancel  net 
balance  due  to  banks  and  bankers,  _         .   _  ._     


306 


EXAHPLES  OF  COnPUTINQ  NATIONAL  BANK  RESERVE. 

The  following  examples  illustrate  the  short  methods  of  computing 
the  reserve  required  to  be  maintained  by  National  banks. 

The  rules  given  for  computing  the  reserve  in  ordinary  cases  are  so 
simple  it  is  thought  no  example  of  these  is  necessary;  but  illustrations 
of  the  Short  Methods  of  Computation  in  certain  cases  may  be  helpful  to 
beginners  in  the  National  Banking  System,  therefore,  the  following 
examples  are  given: 

EXAMPLE  1. 

Illustrating  Rule  3,  Pratts'  Short  Method. 


Individual  Deposits 

Dividends    Unpaid 

Disbursing  Officers,  &c. . . 

Deduct — 
Exchanges  for  Cl'g  House 
Checks  on  local  Banks.. 
Other  Nat'l  Bank  Notes 
Due  from  the  U.S.Treas'r 


Due  to  Banks . . . 
Due  from  Banks. 


r 

$1,275 

000 
110 

12 

000 

58 

000 

15 

000 

1 

500 

1 

000 

340 

000 

95 

000 

Less  4  times  5  per  cent,  fund  (2250) 


Total  net  Deposits 

Subtract — 
Net  balance  with  Reserve  Agents. 


One-seventh  of  remainder. 


$1,257 


Is  the  Exact  Reserve  required  to  be  in  Bank — viz: 

Total  of  items  (cash,  etc.)  in  Bank  to  Count  as 

Reserve  


Excess  in  Bank 

Excess  with  Reserve  Agent. 


75 


1,211 
245 


1,456 
9 


1,447 
205 


1,242 


177 
178 


27 


110 


500 


610 
000 

610 
000 

610 
000 

610 

515 
211 

696 
485 

306 


COnPUTING  RESERVE. 

EXAMPLE  2. 
Illustrating  Rule  No.  4,  Pratts'  Short  Method. 


Individual  Deposits.. 

Dividends  Unpaid 

Disburs'g  Oflacers,  etc., 

Deduct — 
Exch'ges  for  Cl'g  H'se 
Checks  on  local  Banks 
Other  National  Banks 
Due  from  U.  S.  Treas. 

Due  to  Banks 

Due  from  Banks 


$2,400 
174 


116 

30 

4 

1 


680 
620 


000 
220 
000 


000 
000 
000 
000 


000 
000 


$2,574 


151 


220 


000 


Total  Deposits 

Deduct  4  times  the  5  per  cent  fund  (4500) 


Total  Net  Deposits 

25  per  cent-  of  this  total  is  the  total  Reserve  re- 
quired, viz: — , 

And  50  per  cent  of  this  is  the  amount  required  at 
home    


$2,423 
60 


$2,483 
18 


2,465 


220 

000 


220 
000 


220 


If  amount  of  Reserve  at  home  is  short  by  this 
estimate,  as  in  this  case  and  conditions  will  ad- 
mit, the  excess  with  Reserve  Agent  may  be 
applied. 

Total  of  items  (cash,  etc.)  in  Bank  to  Count  as  Reserve. 

Short  on  first  estimate 


Net  balance — 

With  Reserve  Agents 

Amount  with  Reserve  Agents  al- 
lowed to  Count  as  Reserve. . . . 

The  remainder  is  seven-eighths 

of  the  Exact  Excess,  viz: 

Add  one-seventh  of  this, 


Exact  Excess  is. 


362000 


308 


61 


153 


53847 
692 


539 


This  total  being  larger  than  net  balance  due  banks — only 
one-eighth  of  said  balance  can  be  applied  on  Home 
Reserve — ^viz :   


Changing  the  deficit  to  an  Excess,  of — . 


$616 


308 


303 


$    4453 


305 


153 


700 


500 


3053 


Rule  B,  m,  would  apply,  if  in  the  above  example  the  balance  due  to 
banks  was  a  larger  amount  than  the  total  excess  with  Reserve  Agents, 
then  one-eighth  of  that  Excess  could  be  used  to  reduce  the  deficiency. 


307 


COnPUTING  RESERVE. 

EXAMPLE  3. 
Illustrating  Rule  6,  Pratts*  Short  Method. 


Individual  Deposits I  $360 

Dividends  Unpaid J 

Dep.  U.  S.  Disbursing  Officers. 


Less — 
Exchange  for  Clearing  House,. 
Checks  on  local  Banks. ...... 

Other  National  Bank  Notes. . 
Due  from  U.  S.  Treasurer 


Due  to  Banks . . . 
Due  from  Banks. 


10 
3 
1 
1 


000 
150 


000 
000 
500 
000 


80 
10 


000 
000 


$360 


15 


344 

70 


150 


500 


Totals  Deposits 

Less  6|  times  5  per  cent,   fund   (2250)... 


Total  net  Deposits 

Subtract — 
Net  balance  with  Reserve  Agents. 


^st   or  say  -^th  of  the  remainder. 


Is  the  fths  Home  Reserve  required — viz:. 
Total  of  items  (cash,  etc.)  in  Bank  to 
count  as  Reserve 


Approximate  Excess. 


$414 
15 


650 
000 
650 


$399 
45 


$354 


650 
000 


650 


4 


23 
23 


643 

740 


103 


(Or  by  taking  exactly  /^st  of  the   $354,650. 
from  total  cash  items,  etc.,  gives  the 
Exact  Excess — viz:  $357.) 
Three-fifts  added  to  the  above  two-fifths  gives  the  total  minimum  Re- 
serve required,  three-fifths  of  which  may  be  with  the  Reserve  Agents. 


308 


COMPUTING  RESERVE. 

EXAMPLE  4- 
Illustrating  Rule  7,  Pratts*  Short  Method. 


Individual  Deposits 

Dividends  Unpaid. 

Dept.  U.  S.  Disbursing  Officers. 

Less — 
Exchanges  for  Clearing  House. 

Checlts  on  Local  Banks 

Other  National  Bank  Notes... 
Due  from  U.  S.  Treasurer 


$244 


Due  to  Banks 

Due  from  Banks. 


000 
430 


62 

28 


000 
500 
500 
000 


000 
000 


$244430 


12000 


Total  Deposits 

Deduct  6f   times  5  per  cent,  fund  ($2,250) 


Total  net  Deposits $241 


$232 


$256 
15 


430 


24000 


430 
000 


430 


15  per  cent,  of  this  is  the  total  Reserve  required — ^viz: 

Amount  required  at  home  6  per  cent,   (f  ths  of  15  per  cent.) 

of  total  net  Deposits 

If  amount  of  Home  Reserve  by  this  estimate  is  short,  and  con- 
ditions admit,  the  Excess  with  Reserve  Agents  may  be  applied. 


Total  of  items  (cash,  etc.)  in  Bank  to  Count  as  Reserve. 

r 

Short  on  first  estimate 


Net  balance  — 

With  Reserve  Agents 

Amount  with  Reserve  Agents  allowed 
to  Count  as  Reserve 

The  remainder  is  ^y^  of  Exact  Excess 

Add  -j^^  or  say  -^th  of   this ;    [for 

Exact  Excess  yfjy  th] 


Approximate  total  Excess. 


$  42000 


21 


20 
2 


22 


728 


272 

027 


229 


6  per  cent.  (i.  e.    |  of  15  per  cent.)  of  this,  is  amount  that 
can  be  applied  on  Home  Reserve 


$36 


214 


14485 


14257 

228 


1337 


+ 


Making  Home  Reserve  in  Excess  of  requirements. 


$  1 


109 


+ 


THE  FIVE  PEE  CENT.  FUND. 

The  Five  Peb  Cent.  Deposit. — Every  newly-organized  National  bank 
is  required,  immediately  upon  the  receipt  of  its  circulation,  to  de- 
posit with  the  Treasurer  of  the  U.  S.  a  sum  equal  to  five  per  centum  of 
the  amount,  in  lawful  money  of  the  U.  S.,  "  to  be  held  and  used  for 
the  redemption  of  such  circulation,"  in  accordance  with  Section  3, 
Act  of  June  20,  1874,  par  — . 

On  any  additional  circulation  issued  to  National  banks  on  a  further 
deposit  of  bonds   a  similar   deposit   is   required. 

In  estimating  the  circulation  upon  which  the  deposit  is  required, 
the  bank  must  include  all  notes  of  its  issue  in  its  possession,  signed 
or  unsigned,  as  well  as  those  in  actual  circulation. 

Keeping  Fund  Intact. — Upon  receipt  of  advices  of  redemption,  banks 
are  required  to  remit  the  Treasurer  to  make  good  their  five  per  cent, 
fund,  without  awaiting  the  receipt  of  the  notes  fit  for  circulation,  or 
the  certificate  of  destruction  of  the  notes  unfit  for  circulation  as  this 
fund  is  required  to  be  kept  intact  for  further  redemption  of  notes, 
and  also  for  the  reason  that  it  is  allowed  to  be  counted  as  reserve. 

Banks  which  have  made  deposits  of  lawful  money  of  the  U.  S.  for 
the  retirement  of  a  portion  of  their  circulation,  and  those  whose  notes 
have  been  destroyed  without  reissue,  are  required  to  maintain  the 
five  per  cent,  deposits  only  on  the  remainder.  The  excess  over  the 
required  amount  is  remitted  to  the  bank  immediately  on  receipt  from 
the  Comptroller  of  the  Currency  of  advice  of  the  amount  retired. 

Banks  which  have  voted  to  go  into  liquidation  must  maintain  the 
full  five  per  cent,  deposit,  until  lawful  money  of  the  United  States  is 
deposited  for  the  retirement  of  their  outstanding  circulation.  All  of 
their  notes  redeemed,  whether  fit  or  unfit  for  circulation,  are  charged 
to  the  five  per  cent,  fund  and  destroyed.  When  the  deposit  is  made, 
the  excess  of  the  five  per  cent,  fund  over  the  amount  required  to 
cover  the  expenses  of  redemption  and  any  tax  due  is  surrendered, 
the  redemption  of  the  balance  of  the  circulation  outstanding  having 
been  provided  for  by  the  lawful  money  deposit. 

Banks  may  keep  with  the  Treasurer  any  amount  they  choose  in 
excess  of  the  required  five  per  cent.;  but  they  are  not  permitted  to 
count  such  excess  as  a  part  of  their  lawful  money  reserve.  It  should 
be  entered  on  their  reports  of  condition,  under  item:  "Due  from  U. 
S.  Treasurer  other  than  five  per  cent,  redemption  fund." 

Redemptions. — The  redeemed  notes  of  the  several  National  banks 
are  assorted,  prepared  for  delivery,  and  charged  to  their  five  per  cent, 
accounts,  and  advices  of  redemption  are  forwarded  to  them,  in  regu- 
lar rotation,  following  an  alphabetical  arrangement;  and  no  departure 
from  this  practice  can  be  made  for  the  accommodation  of  any  bank. 

309 


310 


If  the  amount  due  does  not  exceed  the  five  per  cent,  deposit  of  the 
bank,  the  notes  fit  for  circulation  are  forwarded  to  it  by  express,  and 
the  notes  unfit  for  circulation  are  delivered  to  the  Comptroller  of 
the  Currency  on  the  same  day  that  the  advice  of  redemption  is  issued. 
If  the  bank's  five  per  cent,  account  is  overdrawn  by  the  redemption, 
a  suflacient  amount  of  the  notes  to  cover  the  overdraft  is  held  until 
it  is  made  good. 

The  law  requires  the  return  of  the  redeemed  notes  fit  for  circula- 
tion to  the  respective,  associations  by  which  they  were  issued,  and 
the  delivery  of  those  unfit  for  circulation  to  the  Comptroller  of  the 
Currency  for  destruction,  and  no  other  disposition  can  be  made  of 
them. 

All  of  the  redeemed  notes  of  banks  which  have  made  a  deposit 
of  United  States  notes  for  the  retirement  of  all  or  a  portion  of  their 
circulation  are  charged  to  that  deposit. 

Upon  a  change  in  the  title  of  a  National  bank  all  of  the  redeemed 
notes  issued  under  the  former  title  are  destroyed,  and  the  same  course 
is  pursued  with  notes  of  the  old  issue  of  banks  whose  charters  have 
been  extended. 

Remittances. — Remittances  for  credit  of  the  five  per  cent,  fund 
may  be  made  in  any  of  the  following  ways: 

I.  By  a  check  drawn  on  New  York,  payable  to  the  order  of  the 
Assistant  Treasurer  U.  S.  in  N.  Y.,  and  collectible  through  the 
clearing-house,  forwarded  directly  to  that  officer,  with  instructions  to 
deposit  the  amount  on  account  of  the  five  per  cent.  fund. 

II.  By  a  deposit  of  lawful  money  of  the  U.  S.  with  the  Assistant 
Treasurer  U.  S.  in  Baltimore,  Boston,  Chicago,  Cincinnati,  New  Or- 
leans, New  York,  Philadelphia,  St.  Louis  or  San  Francisco,  on  account 
of  the  five  per  cent.  fund.  Banks  not  situated  in  one  of  the  above- 
named  cities  should  make  the  deposit  through  their  correspondents. 

III.  By  a  remittance  of  lawful  money  of  the  United  States,  ad- 
dressed to  the  Treasurer  U.  S.,  Washington,  D.  C,  marked  with  the 
amount  and  nature  of  the  contents,  and  with  the  words  "for  credit 
of  the  five  per  cent,  fund,"  and  "under  Government  contract  with 
the  United  States  Express  Company  from  the  nearest  point  of  trans- 
fer." The  express  charges,  if  not  prepaid,  will  be  deducted  from  the 
proceeds  of  the  remittance  at  Government   contract   rates. 

National  bank  depositaries  are  not  authorized  to  receive  deposits 
for  credit  of  the  five  per  cent.  fund. 

Assistant  Treasurers  are  not  authorized  to  receive  remittances  by 
express  on  account  of  the  five  per  cent,  fund;  and  only  the  Assistant 
Treasurer  in  New  York  is  authorized  to  receive  checks  on  that  account. 

It  is  not  necessary  to  advise  the  Treasurer  of  remittances  on  ac- 
count of  the  five  per  cent,  fund,  unless  they  are  made  directly  to  him. 

National  banks  should  make  only  such  deposits  on  account  of  the 


311 

five  per  cent,  fund  as  they  desire  to  have  applied  in  the  redemption  of 
their  notes,  or  in  payment  of  the  expenses  of  redemption. 

Acknowledgments  of  remittances  made  by  one  bank  for  credit  of  the 
five  per  cent,  account  of  another  are  sent  only  to  the  bank  whose 
account  is  credited. 

Ledger  Accounts. — ^A  National  bank  should  keep,  in  connection  with 
its  circulation,  two  accounts — a  "  circulation "  account  and  a  "  five 
per  cent,  fund  "  account. 

The  "  CiECULATioN  "  Account. — 1st.  Credit  circulation  received  from 
the  Comptroller  on  U.  S.  bond  deposit  made  by  the  bank. 

2d.  When  notices  are  received  from  the  U.  S.  Treasurer  of  re- 
demptions made,  debit  the  amounts  reported  by  him.  The  credit  is 
to  the  five  per  cent,  fund  as  stated  below. 

3d.  When  the  Treasurer  returns  notes  redeemed  as  fit  for  circula- 
tion, or  when  the  Comptroller  sends  new  notes  for  mutilated  notes 
received  from  the  Treasurer  and  destroyed,  credit  this  account,  unless 
put  in  the  bank's  vaults,  then  the  amount  is  not  to  be  credited  nor 
counted  as  in  circulation  until  used. 

By  keeping  this  "  circulation  "  account,  the  bank's  books  will  always 
show  the  amount  of  "  circulation  outstanding."  This  item  is  called 
for  in  the  regular  reports  to  the  Comptroller  of  the  Currency,  and  is 
also  the  basis  for  semi-annual  tax  on  average  amount  of  circulation. 

The  "  Five  Per  Cent.  Fund  "  Account. — 1st.  Debit  with  the  re- 
mittance made  the  U.  S.  Treasurer,  required  by  law,  viz.:  an  amount 
equal  to  five  per  cent,  of  the  circulation  issued  to  the  bank. 

2d.  When  notices  of  redemptions  are  received  from  the  Treasurer, 
credit  the  amounts  redeemed,  the  debit  being  against  the  "  circula- 
tion "  account,  as  above  stated. 

3d.  When  the  bank  makes  remittances  to  cover  redemptions  reported 
by  the  Treasurer,  to  reimburse  the  five  per  cent,  fund  for  amounts 
paid  out,  debit  the  bank's  "  five  per  cent,  fund  "  account. 

The  Treasurer  calls  for  remittances  when  redemptions  are  reported 
to  the  banks,  but  frequently  the  banks  do  not  remit  until  returns  are 
made  to  them,  and  may  remit  by  New  York  draft.  The  redemptions 
cover  two  kinds  of  notes,  those  in  good  condition,  called  "  fit  for  circu- 
lation," and  others  mutilated  or  worn,  called  "unfit  for  circulation;" 
the  former  are  returned  to  the  banks  when  a  few  hundred  dollars 
have  been  redeemed,  the  latter  are  sent  to  the  Comptroller  of  the 
Currency  to  destroy  and  to  issue  new  currency  in  same  amount. 

Banks  are  charged  with  the  full  amount  of  their  notes  unfit  for 
circulation  delivered  to  the  Comptroller,  whether  the  exact  amount  is 
re-issued  by  him  or  not.  Sometimes  the  exact  amount  is  not  sent,  on 
account  of  the  rule  of  the  Department  to  remit  only  full  sheets  of 
notes,  i.  e.,  four  notes,  viz.:  $5,  $5,  $5,  $5,  or  $10,  $10,  $10,  $20,  or  two 


312 

notes  of  $50  and  $100,  so  if  the  redemptions  are  of  an  odd  amount, 
say,  $510,  the  Department  will  only  send  25  sheets  of  $5  notes  or 
10  of  plate  10-10-10  20,  but  the  bank  may  send  additional  notes  for 
redemption,  two  fives  or  four  tens,  which  with  the  $10  balance  will 
entitle  the  bank  to  another  sheet,  thus  making  the  account  on  the 
bank's  books  correspond  with  the  books  of  the  Treasury  Redemption 
agency.  Again,  the  remittance  of  new  currency  may  be  short  on 
account  of  the  redemption  of  a  half  note;  in  such  case  the  account 
on  the  bank's  books  will  show  the  difference.  If  a  bank  prefers,  it 
can  cut  a  note  and  forward  half  for  redemption  to  add  to  the  credit 
of  the  former  half  redeemed  in  order  to  get  credit  for  a  full  note,  and 
carry  the  other  half  of  note  cut,  in  cash,  until  another  redemption  of 
a  half,  when  the  one  held  in  cash  can  be  sent  on  to  remedy  the  matter 
again. 

In  addition  to  these  accounts,  a  "  memoranda  account "  should  be 
kept  of  circulating  notes,  printed,  say  in  back  of  the  general  ledger. 

When  a  bank*  makes  its  first  order  for  the  printing  of  its  circu- 
lating notes,  the  order  should  be  for  about  twenty-five  per  cent,  more 
than  the  bank  is  entitled  to  on  its  bond  deposit,  so  as  to  cover  the 
redemptions  to  be  made  from  time  to  time.  When  a  bank  fails  to 
cover  the  additional  amount  in  its  order,  the  Comptroller  changes 
the  order  and  advises  the  bank.  This  amount  and  all  supplemental 
orders  should  be  charged  in  the  "  memoranda  account,"  and  against 
these  items  should  be  credited  all  new  currency  received  from  the 
Department,  whether  on  the  original  order,  supplemental  orders,  or 
in  return  for  circulating  notes  redeemed  and  destroyed.  This  account 
will  always  show  the  amount  of  currency  on  hand  in  the  Comptroller's 
vaults,  and  when  additional  orders  should  be  made.  It  will  be  well 
to  note  the  bank's  number  (lower  lefthand  corner  of  notes)  and  also 
the  Treasury  number  (opposite  righthand  corner)  in  this  memoranda 
account,  as  the  notes  are  received  from  the  Comptroller.  The  Comp- 
troller makes  no  record  of  numbers  on  notes  destroyed,  but  only  of 
denominations  and  amounts,  as  noted  in  certificate  of  destruction  sent 
to  the  bank;  from  this  may  be  kept  a  record  of  the  amounts  of  each 
denomination  destroyed,  if  desired. 

Assessment  for  Expenses. — The  expenses  incurred  for  "  the  charges 
for  transportation  and  the  costs  for  assorting"  the  redeemed  notes 
of  National  banks  are  assessed  upon  the  several  banks,  including 
those  which  have  made  deposits  of  lawful  money  for  the  reduction 
of  their  circulation  in  proportion  to  the  amount  of  their  circulation 
redeemed,  and  charged  to  them  in  their  five  per  cent,  accounts.  The 
assessment  is  made  by  fiscal  years,  and  is  levied  as  soon  after  the 
end  of  each  fiscal  year  (June  30th)  as  the  accounts  can  be  settled 
and  the  computations  made. 

Under  Section  8  of  the  Act  of  July  12,  1882,  National  banks  making 
deposits  of  lawful  money  for  the  retirement  in  full  of  their  circulation 


313 

are,  at  the  time  of  the  deposit,  assessed  for  the  cost  of  transporting 
and  redeeming  the  notes  then  outstanding,  a  sum  equal  to  the  average 
cost  of  the  redemption  of  National  bank  notes  during  the  preceding 
year,  and  any  notes  redeemed  during  the  year  then  current  are  in- 
cluded  in  the  assessment. 

Remittance  should  be  made  for  the  amount  of  the  assessment,  im- 
mediately on  receipt  of  the  notice  thereof,  in  the  same  manner  as  for 
notes  redeemed,  unless  there  is  a  sufficient  excess  to  the  credit  of  the 
bank  in  the  five  per  cent,  fund  to  cover  it,  in  that  case  the  amount 
is  charged  to  that  fund  and  balaiice  remitted  the  bank. 

Method  of  Verifying  Remittances. — Packages  of  National  bank 
notes  received  for  redemption  at  the  Treasury  Department  are  charged 
to,  and  receipted  for,  by  the  counters,  with  the  seals  unbroken;  and 
the  counters  are  required  to  count,  return,  and  obtain  a  receipt  for  the 
contents  of  each  package  before  receiving  another.  An  inventory  of 
the  contents  according  to  the  amounts  marked  on  the  straps  is 
made  immediately  on  opening  the  package,  and  the  contents  of  each 
strap  are  separately  proved.  Discrepancies  are  noted  on  the  proper 
strap,  which  is  returned  to  the  owner.  "  Shorts "  are  at  once  re- 
ported and  verified  by  the  teller  in  charge.  The  packages  are  charged 
to  the  counters  by  the  amounts  on  the  wrappers,  and  any  discrepancy 
between  these  amounts  and  the  contents  is  reported  as  an  "over  "  or  a 
"  short  "  by  inventory. 

Disposition  of  Notes  Redeemed. — The  notes  are  then  assorted  and 
examined  by  experts.  The  currency  fit  for  circulation  is  sent  to  the 
several  banks  of  issue,  and  that  which  is  unfit  for  circulation  is  can- 
celled by  cutting  off  the  signatures  of  the  president  and  cashier, 
then  done  up  in  sealed  packages  and  delivered  daily  to  the  Comptroller 
of  the  Currency,  who  has  it  examined,  counted,  and  schedules  made  for 
the  banks,  of  what  is  to  be  destroyed  each  day.  It  is  then  delivered 
to  clerks  from  the  ofl&ce  of  the  Secretary  of  the  Treasury,  occupying 
a  room  for  the  time  being  in  the  Comptroller's  office,  to  be  examined 
and  counted.  After  this  count  the  notes  are  further  cancelled  by 
punching,  and  then  delivered  as  required  by  Section  5184  of  the  Bank 
Act,  par.  — ,  to  the  agent  of  the  bank  in  the  same  room,  who  examines 
and  counts  them  and  verifies  the  amount.  The  package  is  then 
checked  off  from  the  schedules  in  the  presence  of  four  witnesses, 
representing  the  Secretary  of  the  Treasury,  the  U.  S.  Treasurer,  the 
Comptroller  of  the  Currency  and  the  bank  the  notes  of  which  are  to 
be  destroyed.  It  is  then  deposited  in  a  box  and  locked,  then,  ac- 
companied by  the  witnesses,  taken  to  the  macerator  and  ground  into 
pulp.  New  currency  is  sent  the  banks  for  the  same.  Frequently  notes 
are  pronounced  unfit  for  circulation  though  apparently  in  good  con- 
dition, but  they  are  notes  so  thoroughly  worn,  that  they  would  bear 
22 


314 

but  little  further  use,  and  the  expense  of  new  notes  is  so  very  small 
that  it  is  not  a  consideration. 

Issue  of  New  Circulating  Notes. — The  Issue  of  new  circulating 
notes  to  National  banks  is  under  the  control  of  the  Comptroller  of 
the  Currency,  and  all  inquiries  and  requests  in  regard  thereto  should 
be  addressed  to  him. 

New  currency  is  ordered  to  be  printed  on  requisitions  from  the 
banks,  specifying  the  amounts  and  denominations  desired.  Banks 
should  keep  an  account  of  the  amount  of  their  incomplete  currency 
in  the  Comptroller's  office,  and  should  make  requisitions  on  him  for 
the  printing  of  additional  supplies,  a  sufficient  time  in  advance  of  the 
exhaustion  of  those  previously  ordered,  to  cover  the  time  required  for 
the  printing  of  the  new  notes. 


TAX  ON  CIRCULATING  NOTES. 

National  banks  are  required,  under  provisions  of  the  Revised 
Statutes,  Section  5214  amended  by  Act  March  3,  1883,  and  Act  of  March 
14,  1900,  to  pay  semi-annual  duty  on  their  notes  in  circulation,  and  in 
Section  5215  it  is  made  the  duty  of  the  Treasurer  of  the  United  States 
to  prescribe  the  form  for  making  return  by  each  National  bank  of  the 
average  amount  of  its  notes  in  circulation  for  each  half  year  for  the 
purpose  of  assessment.    The  following  is  the  form: 

Semi-annual  Retubn  of  Cibculation  Subject  to  Duty. 

Return  of  the  average  amount  of  Notes  of  the    National 

Bank    of   ,    State    of    .    In    circulation    for 


the    six    months    next    preceding    the    first    day    of    ' ,    190 — , 

with  the  duty  thereon,  made  pursuant  to  the  provisions  of  Sec- 
tion 5215,  Revised  Statutes  of  the  United  States,  and  the  act  of 
March  14,  1900,  in  order  to  enable  the  Treasurer  of  the  United  States 
to  assess  the  duty  on  circulation  imposed  by  Section  5214  of  said 
statutes,  as  amended  by  Section  1  of  "An  act  to  reduce  internal 
revenue  taxation,  and  for  other  purposes,"  approved  March  3,  1883, 
and  the  said  act  of  March  14,  1900. 

Amount  of  circulating  notes  received  from 
the  Comptroller  of  the  Currency,  $ 

Average  amount  of  notes  In  circulation  for 
the  period  based  on  U.  S.  two  per  cent.  Consols 
of  1930,  $ 

Duty  on  average  amount  of  notes  In  circulation  based  on 
on  U.  S.  two  per  cent.  Consols  of  1930,  at  one-fourth  of  one 
per  cent.,  | — 

Average  amount  of  notes  In  circulation  for  the 
period  based  on  any  or  all  other  U.  S.  Bonds,      $ 

Duty  on  average  amount  of  notes  In  circulation  based  on 
all  other  U.  S.  Bonds  at  one-half  of  one  per  cent.,  $ 


Total  amount  of  duty,  $ • 

I.   ,    of   the   above-named   National    bank,    do 

solemnly  swear  that  the  above  Is  a  true  statement  of  the  average 
amount  of  the  notes  of  said  bank  In  circulation  for  the  time  named. 


Subscribed  and  sworn  to  before  me,  this  day  of 

190—. 


Requirement  and  Penalty  for  Failure. — ^Thls  return,  with  each 
blank  filled  with  the  proper  amount  as  indicated,  and  subscribed  and 
sworn  to  by  the  President  or  Cashier  of  the  bank  before  an  ofBcer 

315 


316 

qualified  to  administer  oaths,  must  be  sent  to  the  Treasurer  of  the 
United  States  within  ten  days  from  the  first  days  of  January  and 
July,  respectively,  in  each  year,  under  a  penalty  of  two  hundred 
dollars,  and  payment  must  be  made  within  the  months  of  January 
and  July. 

How  Payment  Made. — Payment  may  be  made  by  deposit  of  the 
amount  of  duty  to  the  credit  of  the  Treasurer  of  the  United  States, 
with  him,  or  with  any  Assistant  Treasurer  or  National  bank  Deposi- 
tary. Triplicate  certificates  should  be  issued  therefor,  the  "  original " 
of  which  must  be  forwarded  to  the  Secretary  of  the  Treasury,  the 
*'  duplicate "  to  the  Treasurer,  and  the  "  triplicate "  held  by  the 
bank  making  the  deposit  as  its  voucher  therefor.  The  certificate  must 
state  that  the  deposit  is  on  account  of  semi-annual  duty.  No  other 
receipt  will  be  issued. 

If  there  is  no  depositary  convenient,  payment  may  be  made  by  draft 
on  New  York  (collectible  through  the  Clearing  House)  to  the  order  of 
the  Treasurer,  or  by  remittance  to  him  in  lawful  money  of  the 
United  States,  or  notes  of  National  banks,  for  which  the  Treasurer 
will  issue  his  certificate  of  deposit,  and  send  the  duplicate  to  the  bank. 

Peecentage  Assessed  and  Pebiod. — The  duty  on  circulating  notes 
is  one-half  of  one  per  centum  on  the  average  amount  outstanding  for 
the  six  months  based  on  all  U.  S.  bonds,  except  the  two  per  cent, 
consols  of  1930;  on  notes  based  on  two  per  cent,  consols  of  1930 
the  duty  is  one-fourth  of  one  per  cent,  on  the  average  amount  of 
notes  in  circulation  for  the  six  months. 

Liability  begins  on  the  first  days  of  January  and  July  in  each  year, 
unless  a  bank  had  at  that  time  no  circulation  outstanding,  in  which 
case  it  begins  with  the  date  of  the  first  issue  of  notes,  and  terminates 
on  the  30th  day  of  June  or  the  31st  day  of  December  (as  the  case  may 
be),  date  of  commencement  and  termination  both  included. 

Banks  that  have  before  made  returns  will  report  for  the  full  semi- 
annual term  of  181,  182,  or  184-days,  as  the  case  may  be;  and  banks 
that  have  not  before  made  returns  will  report  their  circulating  notes 
from  and  including  the  date  of  their  first  issue. 

Computing  Amount.— To  ascertain  the  average  amount,  add  to- 
gether the  daily  balances  of  the  notes  in  circulation  from  the  proper 
date  of  the  commencement  of  the  liability  to  duty  (including  for 
each  Sunaay  and  holiday  the  balance  of  the  preceding  business  day), 
to  and  including  the  30th  day  of  June,  or  the  31st  day  of  December, 
as  the  case  may  be.  The  aggregate  of  daily  balances  for  the  first  six 
months  of  any  year  will  be  divided  by  181-the  number  of  days  from 
January  1  to  June  30,  except  in  leap  year,  when  the  sum  will  be 
divided  by  182.  The  aggregate  of  daily  balances  for  the  last  six 
months  of  any  year  will  be  divided  by  184— the  number  of  days  from 
July  1  to  December  31. 


3ir 

Banks  not  making  daily  statements,  and  obtaining  their  averages 
from  weekly  statements,  should  add  together  the  weekly  balances. 
Including  for  each  day  in  any  fractional  part  of  a  week  one-seventh 
of  the  weekly  balance  next  preceding  such  fractional  part.  The  ag- 
gregate of  balances  for  the  first  six  months  of  any  year  will  be  di- 
vided by  the  number  of  weeks  from  January  1  to  June  30  (25  and  six- 
sevenths  or  26,  as  the  case  may  be).  The  aggregate  of  balances  for 
the  last  six  months  will  be  divided  by  26  and  two-sevenths — the  num- 
ber of  weeks  from  July  1  to  December  31. 

Banks  having  circulation  subject  to  duty  for  a  period  less  than  a 
half  year,  which  make  their  estimates  from  daily  balances,  will 
divide  the  aggregate  of  the  balances  of  the  item  for  the  time  for  which 
It  is  liable  to  duty  by  the  number  of  days  in  the  half  year;  and  banks 
which  make  their  estimates  from  weekly  balances,  by  the  number  of 
weeks  and  the  fractions  thereof  in  the  half  year.  The  quotient  thus 
found  will  be  the  average  amount  subject  to  duty  for  each  six  montha, 
respectively,  and  should  be  entered  in  the  Return,  and  duty  com- 
puted thereon  at  the  full  semi-annual  rate. 

A  bank  retiring  its  circulation,  or  any  portion  of  it,  is  relieved  from 
duty  on  the  amount  retired  from  the  time  of  making  the  deposit  of 
lawful  money  to  redeem  the  same. 

A  bank  which  has  gone  into  liquidation,  in  making  its  final  return, 
must  estimate  duty  upon  circulation  to  the  time  of  making  the  de- 
posit of  lawful  money  with  the  Treasurer  of  the  United  States  to 
redeem  the  same.  The  item  should  be  averaged  for  the  full  six 
months,  according  to  the  foregoing  rule,  and  the  duty  calculated  at 
the  prescribed  rate.  The  amount  thus  determined  is  the  correct 
proportion  for  the  time  for  which  the  item  is  liable. 

Tax  Required  Only  on  Actual  Circulation. — It  should  be  noted 
that  the  provision  of  the  Revised  Statutes  as  to  duty  on  the  circu- 
lation of  National  banks  applies  only  to  the  currency  of  National 
banks  actually  in  circulation;  that  is,  it  does  not  include  circulating 
notes  of  the  bank  received  from  the  Comptroller  of  the  Currency,  or 
in  transit  fi'om  him,  which  have  not  been  put  into  circulation  by  the 
bank,  nor  does  it  include  the  circulating  notes  redeemed  by  the  U. 
S.  Treasurer,  whi«h  have  not  been  returned  to  the  bank,  and  put  in 
circulation  again,  or  notes  redeemed  and  destroyed  for  which  new 
circulating  notes  are  issued  until  such  new  notes  are  received  and  put 
in  circulation. 

Items  on  Blank. — If  will  be  seen  in  the  blank  sent  for  the  semi- 
annual return  on  circulation  that  the  amount  of  circulating  notes  re- 
ceived from  the  Comptroller  is  called  for.  Whatever  the  object  may 
be  of  having  this  item  given,  it  does  not  have  to  do  with  the  return 
for  assessment,  which  is  simply  the  bank's  notes  actually  in  circula- 
tion and  the  amount  of  semi-annual  tax  due  on  same.    This,  as  bq- 


318 

fore  statedj  may  include  tw«  items  in  case  the  bank  has  more  than  one 
class  of  bonds  as  security,  or  rather  two  per  cent,  bonds  of  1930  and 
other  bonds.  On  the  two  per  cent  bonds,  the  tax  is  only  one-fourth  of 
one  per  cent,  semi-annually,  while  on  other  classes  of  Government 
securities  it  is  one-half  of  one  per  cent.,  so  that  the  bank  having  two 
per  cent,  bonds  and  other  bonds  will  need  to  determine  and  state 
amount  of  circulation  it  has  on  each  when  computing  the  tax  due. 
For  this  purpose  separate  accounts  of  notes  in  circulation  should  be 
kept  according  to  the  class  of  bonds  by  which  they  are  secured.  Banks 
occasionally  pay  in  excess  of  amount  due,  failing  to  observe  the  differ- 
ence in  tax  according  to  bonds  held. 


MISCELLANEOUS  FORMS   OF   COMPTROLLER   OF   CURRENCY. 

FOBM    OF    PBOXY    fob    USE    AT    SHAEEHOLDEBS*    MEETING    FOB    ELECTION    OP 

DiEECTOBS. 

I  do  hereby  constitute  and  appoint ,  of ,  in  the  county  of 

and  State  of ,  my  lawful  proxy,  for  me  and  in  my  name 


to  vote shares  of  the  stock  of  the National  bank  of , 

owned  by  me  and  standing  in  my  name  on  the  books  of  said  bank,  at  the 
annual  meeting  of  the  stockholders  thereof  to  be  held  for  the  election 

of  directors  on  the  day  of  ,  A.  D.,  189 — ,  pursuant  to 

law,  and  at  all  future  meetings  of  stockholders  which  shall  be  held 
for  a  similar  purpose  until  this  authority  shall  be  revoked,  hereby 

ratifying  and  confirming  whatsoever  the  said  may  lawfully  do 

by  virtue  hereof;  and  I  hereby  revoke  and  annul  any  and  all  authority 
heretofore  given  by  me,  authorizing  any  person  for  me,  or  in  my  name, 
to  vote  my  stock  in  said  bank. 

In  witness  whereof  I   have  hereunto   set  my   hand   and   seal   this 

day  of  y  A.  D.,  189—. 

,  (L.  s.) 

Resolution  to  Increase  Capital  Stock. 
The National bank  of 


(Date.) 


At  a  meeting  of  the  shareholders  of  the National bank 

of  held  on  thirty  days'  notice  of  the  proposed  business 

having  been   given,   at   which   shareholders   were   present   in 

person  and  by  proxy,  representing  shares  of  stock  of  this  As- 
sociation, it  was — 

Resolved,  That,  under  the  provisions  of  the  Act  of  May  1,  1886,  the 

Capital  Stock  of  this  Association  be  increased  in  the  sum  of  $ , 

making  the  total  capital  $ . 

The  above  resolution  was  adopted  by  the  following  vote,  representing 
more  than  two-thirds  of  the  Capital  Stock  of  the  Association: 

Name  of  Shabeholdee.  |     Residence.     |  Name  of  Peoxy.  |     No.  of 

Shabes. 


Total  number  of  shares  voted  in  favor  of  the  resolution 
Total    number   of    shares    voted    against    the    resolution   — 
Total   number   of   shares   represented   at   the   meeting  


I  hereby  certify  that  the  above  is  a  true  and  correct  report  of  the 
vote  and  of  the  resolution  adopted  at  a  meeting  of  the  shareholders  of 
this  bank  held  on  

[Seal  of  Bank.]  , 

President  or  Cashier, 

319 


320 


Subscribed  and  sworn  to  before  me,  this  day  of 

A.  D.  — 

[Seal  of  Notaby.] 


Notary  Public.    I 

Cebtificate  of  Increase  of  Capital  Stock. 

No. . 

— —  National  « bank  of  

,  190^. 

To  the  Comptroller  of  the  Currency, 

Washington,  D.  C. 

It  is  hereby  certified,  That  the  capital  stock  of  National 

■ bank  of has  been  increased  pursuant  to  the  provisions 

of  the  act  of  Congress  approved  May  1,  1886,  in  the  sum  of 


dollars,  all  of  which  has  been  paid  in  cash,  not  in  promissory  notes 
or  other  like  evidences  of  debt,  and  that  the  paid-up  capital  stock  of 

the  bank  now  amounts  to  dollars. 

[Seal  of  Bank.] 


State  of 


County  of 


-, }  *»•• 


President  or  Cashier. 


Subscribed  and  sworn  to  before  me  this  day  of 

A.  D.  190—. 

[Seal  of  Notaey.] 


Notary  Public. 

FoEM  of  Resolution  fob  Reduction  of  Capital  Stock  and  Cebtifica- 
tion  of  Vote  to  the  Compteolleb  of  the  Cubeenct. 

,  190—. 

National  bank  of  


At  a  meeting  of  the  shareholders  of  the  National 


bank  of held  on ,  thirty  days'  notice  of  the  proposed 

business    having    been    given,    at    which    shareholders    were    present, 

in  person  and  by  proxy,  representing shares  of  stock  of  this 

Association,   it  was — 

Resolved,  That,  under  the  provisions  of  Section  5143,  U.  S.  Revised 
Statutes,   and   of  the  law  amendatory  thereof,   the   Capital    Stock   of 

this  Association  be  reduced  in  the  sum  of  $ ,  leaving  the  total 

capital,  after  said  reduction,  $ ,  when  approved  by  the  Comp- 
troller of  the  Currency. 


321 

The  above   resolution   was   adopted   by   the   following   vote,   repre- 
senting more  than  two-thirds  of  the  Capital  Stock  of  the  Association: 


Name  of  Shabeholdeb.  |     Residence.     |  Name  of  Piwxy.  |    No.  or 

I  I    Shabes. 


Total  number  of  shares  voted  in  favor  of  the  resolution. 
Total  number  of  shares  voted  against  the  resolution  — 
Total  number  of  shares  represented  at  the  meeting  - 
Total    number   of   shares    of    capital    stock   


I  hereby  certify  that  the  above  is  a  true  and  correct  report  of  the 
vote  and  of  the  resolution  adopted  at  a  meeting  of  the  shareholders 
of  this  bank  held  on  . 

[Seal  of  Bank.]  


President  or  Cashier. 


Subscribed  and  sworn  to  before  me,  this  — day  of 

A.  D.  190—. 

[Seal  of  Notaey.]  


f 


Notary  PuMic. 

Form  of  Resolution  for  Change  of  Name  of  Bank  and  Certifica- 
tion of  Vote  to  the  Comptroller  of  the  Currency. 


National  bank  of 

,  190—. 


At  a  meeting  of  the  shareholders  of  the  National 


bank  of  held  on  ,  thirty  days'  notice  of  the  pro- 
posed business  having  been  given,  at  which  shareholders  were  present, 

in  person  and  by  proxy,  representing shares  of  capital  stock, 

it  was — 

Resolved,  That,  under  the  provisions  of  the  Act  of  May  1,  1886, 

the  corporate   name  of  the  National   bank   of  is 

hereby  changed  to . 

The  above  resolution  was  adopted  by  the  following  vote: 

Name  of  Shareholder.  |     Residence.     |  Name  of  Proxy.  |     No.  of 

I  I  I    Shares. 

Total  number  of  shares  voted  in  favor  of  the  resolution  . 

Total   number   of   shares   voted   against   the   resolution   . 

Total   number  of  shares   represented   at   the   meeting  . 


Total  number  of  shares  of  capital   stock  of  the  bank 


I  hereby  certify  that  the  above  is  a  true  and  correct  report  of  the 
vote  and  of  the  resolution  adopted  at  a  meeting  of  the  shareholders 
of  this  bank  held  on . 

rSEAL  OF  Bank.]  , 

president  or  Cashier^ 


322 


FoBM  OF  Resolution  of  Board  of  Dieectoes  foe  Bond  Transfeb  in 

Change  of  Name  of  Bank. 


1904. 


At  a  meeting  of  the  board  of  directors  of  the  bank  of 

held  at  their  banking  house,  ,  1904,  the  following 


resolution  was  adopted: 

Resolved,    That   the    Comptroller   of    the    Currency   be,    and    he    is 

hereby,  authorized  to  withdraw  $ U.  S.  bonds,  deposited  with 

the  Treasurer  of  the  United  States  by  this  bank  to  secure  circulation, 

and  described  as  follows: 

$ of  the  loan  of  $ of  the  loan  of  

% of  the  loan  of  $ of  the  loan  of  


and  that  the  Treasurer  U.  S.  be,  and  is  hereby,  authorized  to  assign, 

and  transfer  the  same  to  the  Treasurer  U.  S.  in  trust  for  the 

National  Bank  of to  conform  to  change  of  title. 

I  hereby  certify  that  the  above  is  a  true  extract  from  the  minutes 
of  said  meeting. 

[Seal  of  Bank.] 


Cashier  and  Secretary  of  the  Board  of  Directors. 

Note. — The  Treasurer's  receipts  for  the  bonds  proposed  to  be  with- 
drawn must  be  forwarded  (with  this  form  properly  filled)  to  the 
Comptroller  of  the  Currency. 

Application  to  Have  City  Designated  a  Reserve  City. 

To  the  Comptroller  of  the  Currency: 

Sir:  In  accordance  with  the  provisions  of  the  act  approved  March 
3,  1887,  the  National  banks,  whose  corporate  names  are  hereunto 
subscribed  by  their  duly  authorized  officers  or  agents,  do  hereby  make 

application  that  the  city  of  ,   in  the   State  of  ,   be 

added  to  the  cities  named  in  Sections  5191  and  5192  of  the  Revised 
Statutes  of  the  United  States,  so  that  balances  due  from  associations, 
approved  by  the  Comptroller  of  the  Currency  located  in  the  city  of 

aforesaid  may,  to  the  extent  authorized  by  law,  be  included  in  the 

lawful  money  reserve  required  to  be  kept  by  all  National  banks,  except 
banks  in  the  cities  named  in  said  Sections  5191  and  5192  of  the 
Revised  Statutes,  and  such  cities  as,  in  pursuance  of  the  said  act  of 
March  3,  1887,  have  been  added  thereto. 

[Applicants  to  sign  as  follows:] 
The  National  Bank  of »  by ,  President  or  Cashier. 


323 

Authority  of  Officee  to  Sign  Application  fob  Designation  as  a 

Resekve  Citt. 

,  189— 

At  a  meeting  of  the  board  of  directors  of  the  bank  of 

,  held  at  their  banking  house  ,  189 — ,  the  following 

resolution  was  adopted: 

Resolved,  That  the  ,  of  this  bank,  be,  and  he  is 

hereby,  authorized  to  sign  the  corporate  name  of  the  bank  to  an 
application  to  be  made  to  the  Comptroller  of  the  Currency  that,  in 
accordance  with  the  provision  of  the  act  of  March  3,  1887,  the  city  of 

be  added  to  the  cities  named  in  Sections  5191  and  5192  of  the 

Revised  Statutes  of  the  United  States. 

I  hereby  certify  that  the  above  is  a  true  extract  from  the  minutes 
Of  said  meeting. 

[Seal  of  Notaiy.] 


Cashier  and  Secretary  of  the  Board  of  Directors, 

WiTHDBAWAL   OF    BONDS. 

At  a  meeting  of  the  board  of  directors  of  the  bank  of 

-,  held  at  their  banking  house  y  189 — ,  the  following 


resolution  was  adopted: 

Resolved,    That   the   Comptroller   of   the   Currency   be,    and    he   is 

hereby,  authorized  to  withdraw  $ U.  S.  bonds,  deposited  with 

the  Treasurer  of  the  United  States  by  this  bank  to  secure  circulation, 
and  described  as  follows: 

$ of  the  loan  of  ,  and   that  be,  and   is 

hereby  authorized  to  sell,  assign,  and  transfer  the  same,  and  to 
appoint  one  or  more  attorneys  for  that  purpose. 

I  hereby  certify  that  the  above  is  a  true  extract  from  the  minutes  of 
said   meeting. 

[Seal  of  Bank.] 


Cashier  and  Secretary  of  the  Board  of  Directors. 
Note. — The  Treasurer's  receipts  for  the  bonds  proposed  to  be  with- 
drawn must  be  forwarded  (with  this  form  properly  filled)  to  the 
Comptroller  of  the  Currency.  In  case  the  bonds  are  simply  to  bd 
transferred  from  one  account  to  another  of  the  same  bank  the  Treas- 
urer of  the  U.  S.  should  be  authorized  to  act. 

Notice  to  Shaseholdebs  of   Impairment  of  Capital. 

,  190^— . 

Sib: — You   are   hereby   notified   that   this   association   has   received 
notice  from  the  Comptroller  of  the  Currency  that  its  capital  stock 

has  become  impaired  by  the  amount  of  | ,  and  that  under  the 

provisions  of  Section  5205,  United  States  Revised  Statutes,  this  de- 


324 


fieiency  in  the  capital  stock  must  be  made  good  by  assessment  upon 
the  shareholders  pro  rata  to  the  amount  of  capital  stock  held  by 
each,  or  the  bank  placed  in  liquidation. 

Your  proportion  of  the  assessment  upon shares  held  by  you 

amounts  to  $ . 

You  are  hereby  notified  that  a  meeting  of  the  shareholders  of  this 

association  will  be  held  on  the  day  of  at  

for  the  purpose  of  considering  and  voting  upon  the  question  of  paying 

the  assessment  within  three  months  from  190 — ^,  the  date  of 

the  Comptroller's  notice,  or  placing  the  bank  in  liquidation. 


Directors  of 


FoEM  OF  Statement  of  U.  S.  Bonds  Held  by  U.  S.  Tbeasureb. 
The  following  is  a  statement  of  the  United  States  bonds  held  by 
the  Treasurer   of  the   United   States   in   trust  for   the  Na- 
tional        bank    of    on    the    day    of    , 

190 — ,  from  the  books  of  the  said  Association,  and  is  furnished  for 
comparison  with  the  records  of  the  Comptroller  of  the  Currency  and 
for  making  examination  of  said  bonds  deposited  with  the  Treasurer  of 
U.  S.,  as  required  by  Section  5166,  Revised  Statutes. 


TITLE  OF  BONDS. 
[Numbers  and  denominations  of  bonds  not  re- 

Amount of  Bonds  on  Deposit  with  the 
Treasurer  of  the  U.  S.  as  Security. 

quired.  Give  only  total  amount  of  each  class.] 

For  Circul'g  Notes. 

For  Gov't  Deposits. 

2  per  cent.  Consols  of  1930 

3  per  cent.  Loan  of  1908-1918 

4  per  cent.  Founded  Loan  of  1907 

4  per  cent.  Loan  of  1925 

5  per  cent.  Loan  of  1904 

$ 

$ 

Total 

Office  of  Comptroller  of  the  Currency. 
Correct  as  to  bonds  held  for  security 
of  circulating  notes. 


Cashier. 


For  Comptroller  of  the  Currency. 


Form  of  Poweb  of  Attorney  to  National  Bank  Agent  to  Witness 
Destruction  of  Mutilated  Notes  and  to  Examine  Bonds  of  Bank. 

Know  all  men  hy  these  presents.  That  ,  of  Washington,  D. 

C,  are  severally  and  separately  hereby  appointed  the  true  and  lawful 

agents  of  the National  — bank  of  to  witness 

tor  and  in  behalf  of  said  bank  the  destruction  of  its  circulating  notes, 


325 

as  required  by  Section  5184  of  the  Revised  Statutes  of  the  United 
States  relating  to  National  banks  and  Act  of  Congress  approved  June 
23,  1874. 

Also  to  examine  and  compare  the  bonds  deposited  in  the  office  of  the 
Treasurer  of  the  United  States,  in  trust  for  said  bank,  with  the  books 
of  the  Comptroller  of  the  Currency  and  the  accounts  of  said  Associa- 
tion, as  shown  by  the  transcripts  which  may  be  furnished  from  time 
to  time;  and  if  said  bonds  are  found  to  be  correct,  and  to  agree  with 
said  books  and  transcripts,  to  execute  to  the  said  Treasurer  certifi- 
cates in  accordance  with  the  requirements  of  Section  5166  of  the 
Revised  Statutes  of  the  United  States  relating  to  National  banks. 

In  witness  whereof,  I  have  hereunto  set  my  hand  and  affixed  the  cor- 
porate seal  of  said  bank  this day  of ^  190 — . 

[Seal  of  Bank.] 


President  or  Cashier. 

FOBM   OF   POWEB  OF   ATTORNEY   TO   NATIONAL    BaNK    AgENT   TO    SeND   NeW 

CUEBENCY   BY   REGISTEBED   MaIL. 

Know  all  men  6y  these  presents,  That ,  of  the  City  of  Wash- 
ington, D.  C,  are  hereby  appointed  the  true  and  lawful  agents  of  the 

National  bank  of to  receive  from  the  Comptroller  of 

the  Currency  for  and  in  behalf  of  said  bank  any  incomplete  National 
Bank  currency  which  may  hereafter  be  due  and  issuable  to  it  under 
Sections  5171  or  5184,  Revised  Statutes  of  the  United  States,  or  under 
Section  6,  Act  of  July  12,  1882,  and  this  bank  will  be  responsible  for 
the  redemption  of  currency  so  delivered  to  said  Agents,  the  same 
as  if  delivered  directly  to  the  bank. 

In  witness  whereof,  I  have  hereunto  set  my  hand  and  affixed  the 
corporate  seal  of  said  bank,  this  — < day  of  ,  190 — . 

[Seal  of  Bank.] 


President  or  Cashier. 


PART     FOURTH. 

Eegulations  governing  Issue,  Eedemption,  etc.,  of  IJ.  S.  Paper 
Currency  and  Coin — Transmission  and  Express  Charges,  including 
J^ational  Bank  Notes — Transmission  of  U.  S.  Paper  Currency  and 
National  Bank  Notes  by  Eegistered  Mail  Insured — Transfer,  Con- 
version, etc.,  of  United  States  Bonds. 

Issue  of  Paper  Currency,  Coin,  etc. 

Issue  of  Treasurer's  Transfer  Checks. 

Eedemption  of  U.  S.  Paper  Currency  and  Coin. 

Transmission  to  U.  S.  Treasurer  of  U.  S.  Paper  Cur- 
rency, Coin  and  National  Bank  Notes. 

Transportation  Charges  Under  Express  Contract 

Transportation  of  U.  S.  Paper  Currency  and  Na- 
tional Bank  Notes  by  Eegistered  Mail  Insured. 

Counterfeit  Notes  and  Coins. 

Lost  Treasury  Warrant  or  Check. 

U.  S.  Coupon  Bonds. 

U.  S.  Eegistered  Bonds. 

Assignment  of  Bonds. 

Power  of  Attorney  for  Transfer. 

Exchange  for  New  Bonds. 

Closing  of  Transfer  Books. 

Payment  of  Interest. 

Lost  Bonds. 

Called  Bonds. 

Issues  of  U.  S.  Bonds. 

Indorsement  of  Treasury  Drafts. 

REGULATIONS  OF   U.  S.  TREASURER'S  OFFICE. 

ISSUE  OP  PAPER  CURRENCY.— New  United  States  notes,  silver 
certificates,  or  gold  certificates,  will  be  forwarded  by  express,  at  expense 
of  the  consignee,  at  Government  contract  rates,  or  by  registered  mail, 
registration  free,  at  the  risk  of  the  consignee,  in  return  for  such  notes 
or  certificates  unfit  for  circulation,  National-bank  notes,  subsidiary 
silver  coin,  or  minor  coin  received  for  exchange  or  redemption. 
Treasury  notes  of  1890,  fit  or  unfit  for  circulation,  will  be  accepted. 

326 


327 

Silver  certificates  (|1,  $2  and  $5)  are  issued  by  the  Treasurer  or 
Assistant  Treasurers  upon  a  deposit  of  standard  silver  dollars. 

Gold  certificates  [$20,  $50,  $100,  $500  and  $1,000]  are  issued  by  the 
Treasurer  or  Assistant  Treasurers  upon  a  deposit  of  gold  coin. 

ISSUE  OF  GOLD  COIN. — Gold  coin  is  issued  in  redemption  of  United 
States  notes  and  Treasury  notes  of  1890  by  the  Treasurer  and  all  the 
Assistant  Treasurers. 

ISSUE  OF  STANDARD  SILVER  DOLLARS  AND  SUBSIDIARY  SIL- 
VER COIN. — Standard  silver  dollars  are  issued  by  the  Treasurer  and 
Assistant  Treasurers  in  redemption  of  silver  certificates  and  Treasury 
notes  of  1890,  and  are  sent  by  express,  at  the  expense  of  the  Government, 
in  sums  or  multiples  of  $500,  for  silver  certificates  or  Treasury  notes  of 
1890,  deposited  with  the  Treasurer  or  any  Assistant  Treasurer. 

Subsidiary  silver  coin  will  be  paid  in  any  amount  by  the  Treasurer  or 
Assistant  Treasurers  in  the  cities  where  their  several  oflaces  are,  or  will 
be  sent  by  express,  in  sums  of  $200  or  more,  at  the  expense  of  the  Gov- 
ernment, or  by  registered  mail,  at  the  risk  of  the  consignee,  in  packages 
of  $50,  registration  free,  as  the  depositors  may  request,  from  the  most 
convenient  Treasury  office.  Upon  the  deposit  of  an  equivalent  sum  in 
U.  S.  currency  or  National  bank  notes  with  the  Treasurer  or  any  Assist- 
ant Treasurer  or  National  bank  depositary.  For  this  purpose  drafts 
may  be  sent  to  the  Treasurer  U.  S.  in  Washington  or  Assistant  Treas- 
urer in  New  York,  payable  in  their  respective  cities  to  the  order  of  the 
officer  to  whom  sent.  Drafts  on  New  York  City  must  be  collectible 
through  the  clearing  house,  and  should  be  drawn  to  the  order  of  the 
Assistant  Treasurer  of  U.  S.,  New  York,  and  mailed  to  him  direct. 

Subsidiary  silver  coin  is  sent  from  the  nearest  subtreasury  office  by 
express,  transportation  free,  in  sums  of  not  less  than  $200.  When 
desired,  a  less  amount  will  be  sent  by  express,  at  the  expense  of  the 
consignee  for  tranpsortation. 

ISSUE  OF  MINOR  COIN.— One-cent  bronze  and  five-cent  nickel 
pieces  will  be  paid  in  any  amount  by  the  Treasurer  or  Assistant 
Treasurers  in  the  cities  where  their  several  offices  are,  or  will  be  sent 
by  express,  in  sums  of  $20  or  more,  at  the  expense  of  the  (Government,  or 
by  registered  mail,  in  like  sums,  at  the  risk  of  the  consignee,  registra- 
tion free,  as  the  depositors  may  request,  from  the  most  convenient 
Treasury  office  upon  the  deposit  of  an  equivalent  sum  in  U.  S.  currency 
or  National  bank  notes  with  the  Treasurer  or  any  Assistant  Treasurer 
or  National  bank  depositary.  For  this  purpose  drafts  may  be  sent  to  the 
Treasurer  in  Washington  or  Assistant  Treasurer  in  New  York,  payable 
in  their  respective  cities  to  the  order  of  the  officer  to  whom  sent 
Drafts  on  New  York  City  must  be  collectible  through  the  clearing 
house,  and  should  be  drawn  to  the  order  of  the  Assistant  Treasurer  ot 
the  U.  S.,  New  York,  and  mailed  to  him  direct. 


328 

The  express  charges  on  new  silver  or  minor  coin  sent  from  the  mints 
of  the  United  States  must  be  paid  by  the  consignee  on  delivery. 

The  offices  of  the  Assistant  Treasurers  are  located  in  the  following 
cities,  viz.:  New  York,  Boston,  Philadelphia,  Baltimore,  New  Orleans, 
Cincinnati,  Chicago,  St.  Louis,  and  San  Francisco. 

ISSUE  OP  THE  TREASURER'S  TRANSFER  CHECKS.— Subject  to 
the  convenience  of  the  Treasury,  and  provided  that  the  express  charges 
on  remittances  have  been  prepaid  at  bankers'  rates,  the  Treasurer  will 
Issue  transfer  checks  on  the  Assistant  Treasurers,  payable  to  the  order 
of  the  sender  or  his  correspondent,  for  United  States  notes,  Treasury 
notes  of  1890,  and  gold  certificates  unfit  for  circulation,  or  National- 
bank  notes  sent  to  the  Treasurer  for  redemption,  or  for  subsidiary  sil- 
ver coin  or  minor  coin  sent  in  multiples  of  $20  to  the  Treasurer  or  an 
Assistant  Treasurer. 


REDEMPTION  OF  PAPER  CURRENCY.— United  States  notes,  Treas- 
ury notes  of  1890  and  gold  certificates  are  redeemable  in  cold  coin, 
and  silver  certificates  in  silver  dollars,  by  the  Treasurer  and  Assistant 
Treasurers.  National-bank  notes  are  redeemable  in  lawful  money  of 
the  United  States  by  the  Treasurer,  but  not  by  the  Assistant  Treas- 
urers. 

United  States  notes.  Treasury  notes  of  1890,  gold  certificates,  and 
silver  certificates  unfit  for  circulation,  when  not  mutilated  so  that 
less  than  three-fifths  of  the  original  proportions  remains,  may  be  pre- 
sented to  the  Treasurer  or  any  Assistant  Treasurer  for  exchange,  at 
face  value,  for  new  United  States  paper  currency.  Fractional  cur- 
rency notes  are  redeemable  in  lawful  money. 

United  States  notes,  Treasury  notes  of  1890,  fractional  currency 
notes,  gold  certificates,  silver  certificates,  and  National  bank  notes, 
when  mutilated  so  that  less  than  three-fifths,  but  clearly  more  than 
two-fifths,  of  the  original  portion  remains,  are  redeemable  by  the 
Treasurer  only,  at  one-half  the  face  value  of  the  whole  note  or  cer- 
tificate. Fragments  not  clearly  more  than  two-fifths  are  not  redeemed, 
unless  accompanied  by  the  evidence  required  in  next  paragraph. 

Fragments  less  than  three-fifths  are  redeemed  at  the  face  value  of 
the  whole  note  when  accompanied  by  an  affidavit  of  the  owner  or 
other  person  having  knowledge  of  the  facts  that  the  missing  portions 
have  been  totally  destroyed.  The  affidavit  must  state  the  cause  and 
manner  of  the  mutilation,  and  must  be  sworn  and  subscribed  to  before 
an  officer  qualified  to  administer  oaths,  who  must  affix  his  official  seal 
thereto,  and  the  character  of  the  affiant  must  be  certified  to  be  good 
by  such  officer  or  some  one  having  an  official  seal.  Signatures  by  mark 
(X)  must  be  witnessed  by  two  persons  who  can  write,  who  also  must 
give  their  places  of  residence.  The  Treasurer  will  exercise  such  dis- 
cretion under  this  regulation  as  may  seem  to  him  needful  to  protect 


329 

the  United  States  from  fraud.  Fragments  not  redeemable  are  re- 
jected and  returned.  Paper  currency  which  has  been  totally  des- 
troyed can  not  be  redeemed.  The  Department  does  not  furnish  blank 
forms  for  afladavits. 

RETURNS  FOR  PAPER  CURRENCY.— For  remittances  received 
under  the  Government  contract: 

For  remittances  from  a  place  where  there  is  no  subtreasury,  re- 
turns will  be  made  in  new  United  States  paper  currency  by  express, 
at  the  expense  of  the  consignee,  at  Government  contract  rates;  or  in 
subsidiary  silver  coin,  in  sums  of  $200  or  more,  at  the  expense  of  the 
Government  for  transportation. 

For  remittances  from  a  place  where  there  is  a  subtreasury,  returns 
will  be  made  in  new  United  States  paper  currency  by  express,  at  the 
expense  of  the  consignee,  at  Government  contract  rates;  or,  subject  to 
the  convenience  of  the  Treasury,  in  the  Treasurer's  transfer  checks 
on  the  subtreasury  in  the  place  whence  the  remittance  is  received. 

No  exchange  for  remittances  of  currency  to  the  Treasurer  fo*  re- 
demption under  the  Government  contract  will  be  furnished  either  by 
transfer  checks  or  shipments  of  currency. 

REDEMPTION  OF  SILVER  AND  MINOR  COIN.— Subsidiary  silver 
coin  and  coins  of  copper,  bronze,  or  copper-nickel  may  be  presented  in 
sums  or  multiples  of  $20,  assorted  hy  denominations  in  separate  pack- 
ages, to  the  Treasurer  or  an  Assistant  Treasurer  for  redemption  or 
exchange  into  lawful  money,  and  STANDARD  SILVER  DOLLARS  for 
exchange  into  silver  certificates  only.  When  forwarded  by  express,  the 
charges   should  be  prepaid. 

Depositors  of  subsidiary  silver  coin  will  obtain  quicker  returns  and 
aid  the  Department  in  retiring  the  old  issues  from  circulation,  if 
they  will  present  coins  of  the  old  designs  and  the  new  in  separate 
packages. 

No  foreign,  mutilated,  or  defaced  silver  coins,  or  coins  to  which 
paper  or  any  other  substance  has  been  attached  as  an  advertisement, 
or  for  any  other  purpose,  will  be  received.  Reduction  by  natural 
abrasion   is  not  considered  mutilation. 

Minor  coin  that  is  so  defaced  as  not  to  be  readily  identified,  or  that 
Is  punched  or  clipped,  will  not  be  redeemed  or  exchanged.  Pieces 
that  are  stamped,  bent,  or  twisted  out  of  shape,  or  otherwise  imper- 
fect, but  showing  no  material  loss  of  metal,  will  be  redeemed. 

TRANSMISSION  TO  THE  TREASURER.— United  States  notes, 
Treasury  notes  of  1890,  gold  certificates,  silver  certificates,  and  Na- 
tional bank  notes  should  be  sent  in  separate  remittances.  The  notes 
should  be  assorted  by  denominations  and  inclosed  in  paper  straps, 
not  more  than  100  notes  to  each  strap,  and  the  straps  should  be  marked 
23 


330 

with  the  amount  of  their  contents.    Not  more  than  8,000  notes  should 
be  put  in  one  package. 

An  inventory,  giving  the  amount  of  each  denomination  of  notes,  the 
total  amount  in  the  package,  the  address  of  the  party  sending,  and 
the  disposition  to  be  made  of  the  proceeds,  should  be  inclosed  with 
each  package,  and  a  letter  of  advice  sent  by  mail.  A  compliance  with 
the  foregoing  regulations  will  insure  prompt  returns  for  remittances. 

The  package,  if  it  be  sent  by  express,  should  be  put  up  in  a  stout 
paper,  sealed  and  addressed  to  the  "  Treasurer  of  the  United  States, 
Washington,  D.  C."  The  wrapper  should  be  plainly  marked  with  the 
owner's  name  and  address,  the  amount  and  kind  of  currency  inclosed, 
and,  if  the  sender  desires  the  benefit  of  the  Government  contract,  with 
the  words  "  under  Government  contract  with  the  United  States  Ex- 
press Company  from  the  nearest  point  of  transfer." 

When  gold,  silver,  or  minor  coin  is  shipped  for  credit  of  the  5 
per  cent,  redemption  fund,  or  as  a  transfer  of  funds,  it  should  be  so 
stated  on  the  shipping  tag  attached  to  the  bag. 

It  is  the  duty  of  postmasters  to  register  free  of  charge  all  letters  on 
which  the  postage  has  been  fully  prepaid,  addressed  to  the  Treasurer, 
containing  currency  of  the  United  States  for  redemption.  It  is  recom- 
mended that  all  such  letters  be  registered  as  a  protection  against  loss. 

Remittances  of  money  by  mail  should  be  addressed  to  the  "  Treasurer 
of  the  United  States,  Washington,  D.  C."  Such  remittances  and  re- 
turns therefor  by  mail  are  invariably  at  the  risk  of  the  owners.  All 
communications  to  the  Treasurer  in  regard  to  packages  lost  in  the 
mail  are  referred  for  investigation  to  the  Chief  Post  Office  Inspector, 
Post  Office  Department,  Washington,  D.  C,  to  whom  any  subsequent 
inquiry  on  the  subject  should  be  addressed. 

Paper  currency  presented  for  redemption  or  exchange,  or  for  credit 
of  the  Treasurer  at  the  offices  of  the  Assistant  Treasurers,  must  be 
assorted  by  kinds  and  denominations,  and  inclosed  in  paper  straps,  the 
straps  not  to  contain  more  than  100  notes  each,  and  must  be  plainly 
marked  with  the  amount  of  the  contents. 

EXPRESS  CHARGES. — The  Government  contract  with  the  United 
States  Express  Company  for  the  transportation  of  moneys  and  se- 
curities extends  to  all  points  accessible  through  established  express 
lines  reached  by  continuous  railway  communication,  in  all  the  States 
and  Territories  of  the  United  States,  excepting  Alaska,  Arizona,  Cali- 
fornia, Idaho,  Nevada,  New  Mexico,  Oregon,  Utah  and  Washington, 
but  does  not  embrace  sea,  river,  or  stage  transportation  of  any  kind. 

The  contract  rates  for  the  transportation  of  all  kinds  of  paper 
currency  to  or  from  Washington  are: 

Between  Washington  and  points  in  the  territory  of  the  United 
States  Express  Company  and  reached  by  it,  20  cents  per  $1,000  or 
fractional  part  thereof  over  $500;   sums  of  $500  or  less,  10  cents. 


331 

Between  Washington  and  points  in  th€  territory  of  another  ex- 
press company,  excepting  points  in  Texas,  Arkansas,  Colorado,  Kansas, 
Nebraslva,  Montana,  North  Dakota,  South  Dakota,  Wyoming,  and  the 
Indian  and  Oklahoma  Territories,  60  cents  per  $1,000  or  fractional  part 
thereof  over  $500;  sums  of  $500  or  less,  40  cents. 

Between  Washington  and  points  in  Colorado,  Kansas,  and  Nebraska, 
75  cents  per  $1,000  or  fractionaJ  part  thereof  over  $500;  sums  of  $500 
or  less,  50  cents. 

Between  Washington  and  points  in  Texas,  Arkansas,  Montana,  North 
Dakota,  South  Dakota,  Wyoming  and  the  Indian  and  Oklahoma  Ter- 
ritories, $1  per  $1,000  or  fractional  part  thereof  over  $500;  sums  of 
$500  or  less,  65  cents. 

Express  charges  are  paid  by  the  Government,  at  contract  rates. 

On  standard  silver  dollars,  in  sums  or  multiples  of  $500. 

On  subsidiary  silver  coin  in  sums  of  $200  or  more. 

On  minor  coin,  sent  by  the  Treasurer  or  Assistant  Treasurers,  in 
sums  or  multiples  of  $20,  and 

On  National  bank  notes  sent  to  the  Treasurer  for  redemption  in 
sums  or  multiples  of  $500. 

Express  charges  deducted: 

On  the  United  States  notes,  Treasury  notes  of  1890,  gold  certificates, 
or  silver  certificates,  sent  for  redemption  or  exchange,  or  any  kind  of 
lawful  money  sent  for  credit  of  the  5  per  cent,  redemption  fund,  and  on 
National  bank  notes  sent  for  redemption  in  other  amounts  than  multi- 
ples of  $500,  the  charges,  if  not  prepaid,  are  deducted  from  the  pro- 
ceeds at  contract  rates. 

On  United  States  notes.  Treasury  notes  of  1890,  gold  certificates,  or 
silver  certificates,  returned  for  United  States  currency  or  National 
bank  notes,  redeemed  or  exchanged,  the  charges  are  deducted  at  con- 
tract rates. 

Express  charges  prepaid  by  sender: 

On  gold  coin,  standard  silver  dollars,  subsidiary  silver  coin,  and 
minor  coin,  sent  for  exchange  or  redemption,  the  charges  must  be 
prepaid  by  the  sender. 

On  transfers  of  funds  from  National  bank  depositaries,  under  letters 
of  instruction,  the  charges  must  be  paid  by  the  depositaries. 

Express  charges  can  not  be  prepaid  at  Government  contract  rates. 

The  Treasury  has  no  control  over  rates  exacted  when  the  charges  are 
prepaid,  or  for  transportation  outside  of  the  territorial  limits  of  the 
contract. 

No  charge  is  made  for  the  amount  of  express  charges  inclosed  with 
a  remittance  when  separately  noted  on  the  wrapper.  Packages  should 
always  be  marked  with  the  exact  amount  of  the  contents. 


332 

INCOMPLETE  CURRENCY  FROM  WASHINGTON  BY  REGIS- 
TERED MAIL,  INSURED.— The  Comptroller  of  the  Currency  will  de- 
liver the  new  currency  of  a  National  bank  to  an  agent  duly  authorized 
by  power  of  attorney  to  forward  to  the  bank  by  registered  mail  in- 
sured. We  act  in  this  capacity  for  a  large  number  of  the  banks, 
covering  the  risks  in  one  of  the  strongest  and  most  reliable  marine 
insurance  companies.  This  method  is  found  less  expensive,  than  send- 
ing by  express,  to  many  banks  off  the  line  of  the  Express  company 
which  has  the  Government  contract  for  transportation  of  moneys. 
A.  S.  Pratt  &  Sons  will  furnish  estimate  of  expense  and  blank  power  of 
attorney  on  application. 

COUNTERFEIT  NOTES  AND  COINS.— The  act  of  June  30,  1876 
(19  Statutes,  64)  requires  "that  all  United  States  officers  charged  with 
the  receipt  or  disbursement  of  public  moneys,  and  all  officers  of  Na- 
tional banks,  shall  stamp  or  write  in  plain  letters  the  word  *  counter- 
feit,' '  altered,'  or  '  worthless,'  upon  all  fraudulent  notes  issued  in  the 
form  of  and  intended  to  circulate  as  money  which  shall  be  presented 
at  their  places  of  business;  and  if  such  officers  shall  wrongfully  stamp 
any  genuine  note  of  the  United  States  or  of  the  National  banks,  they 
shall,  upon  presentation,  redeem  such  notes  at  the  face  value  thereof." 

Counterfeit  notes  found  in  remittances  from  banks  are  returned  can- 
celed for  the  purpose  of  enabling  them  to  make  reclamation,  and  after 
such  use  they  must  be  returned  for  transfer  to  the  Secret-Service 
Division  of  the  Treasury  Department. 

Counterfeit  notes  found  in  remittances  from  individuals  are  for- 
warded direct  to  the  Chief  of  the  Secret-Service  Division.  The  sender 
is  advised  of  the  fact,  with  the  information  that  if  he  will  communi- 
cate with  the  Chief,  giving  a  history  of  the  note,  arrangements  will  be 
made  to  have  the  counterfeit  note  submitted  for  reclamation. 

Counterfeit  coins  found  in  remittances  to  this  office  are  at  once 
canceled  and  sent  to  the  Secret-Service  Division  of  the  Treasury  De- 
partment, a  receipt  for  the  same  being  returned  to  the  depositor. 
Should  the  coins  be  desired  for  the  purposes  of  reclamation,  the  de- 
positor may  correspond  with  the  Chief  of  the  Secret-Service  Division. 

Counterfeit  coins  received  at  the  subtreasuries  are  retained,  to  be 
called  for  by  agents  of  the  Secret-Service  at  stated  periods.  Receipts 
are  issued  to  the  senders  or  depositors,  when  desired,  for  the  purpose 
of  enabling  them  to  make  reclamation  for  coins  so  retained. 

LOSS  OF  TREASURY  WARRANT  OR  CHECK.— In  case  of  the  loss  or 
destruction  of  a  Treasury  warrant  or  one  of  the  Treasurer's  checks, 
and  upon  application  for  a  duplicate,  payment  of  the  original  warrant 
or  check  is  stopped,  and  the  applicant  is  furnished  with  a  form  ot 
bond  of  indemnity,  upon  return  of  which,  properly  executed,  a  du- 
plicate is  issued. 


333 

EEGULATIONS  EEGARDHSTG  U.  S.  BONDS. 

U.  S.  Coupons,  Bonds,  Exchange,  etc. — Coupon  bonds  of  the  United 
States  are  payable  to  bearer,  and  pass  by  delivery  without  endorse- 
ment. They  are  convertible  into  registered  bonds  of  the  same  loan,  but 
the  law  does  not  authorize  the  conversion  of  registered  into  coupon 
bonds. 

Coupon  bonds  forwarded  to  the  Department  for  exchange  into  regis- 
tered bonds  should  be  addressed  to  the  Secretary  of  the  Treasury,  Divi- 
sion of  Loans  and  Currency. 

There  is  no  expense  attending  the  exchange  at  the  Department;  but 
when  bonds  are  sent  by  express  the  charges  must  be  paid  by  the  party 
transmitting  them. 

FOBM  OF  LETTEB  to  THE  SeCRLTABY  OF  THE  TBEASUBY. 

SiE  :  Herewith  I  send  $ — '■ U.  S.  coupon per  cent,  bonds  of 

the  act  of ;  which  please  exchange  into  registered  bonds  in  the 

name  of ,  and  send  the  new  bonds  to . 

Interest  checks  to  be  mailed  to . 


Respectfully, 


United  States  Registebed  Bonds. — Registered  bonds  of  the  United 
States  differ  from  coupon  bonds  in  the  following  respects,  namely  :  (1) 
They  have  expressed  upon  their  face  names  of  those  who  own  them, 
denominated  payees;  (2)  they  are  payable  only  to  such  payees  or  their 
assigns;  and  (3)  the  property  or  ownership  in  them  can  be  transferred 
only  by  assignment.  For  assigning,  there  are  forms  on  backs  of  the 
bonds  with  directions  for  execution  of  assignments. 

An  account  is  opened  in  the  Department  with  each  holder  of  one  or 
more  registered  bonds,  with  description  of  bonds.  All  transfers  must  be 
made  on  the  books  of  the  Register  of  the  Treasury. 

Assignment  of  Bonds. — In  the  execution  of  assignments  follow  care- 
fully the  directions  on  the  backs  of  the  bonds  and  write  name  of  the 
assignee  plainly  in  the  space  designated.  Assignments  must  &e  dated 
and  properly  acknowledged;  and  the  seal  of  the  acknowledging  oflacer 
should  be  affixed  to  his  certificate  on  the  back  of  each  bond. 

If  a  bond  is  to  be  divided  among  two  or  more  parties,  their  names 
and  the  amount  to  each  should  be  stated  in  the  assignment.  If  part  of 
a  bond  is  assigned  to  one  party,  a  new  issue  for  the  remainder  of  the 
bond  will  be  made  to  the  former  payee.  Provided,  however,  That  the 
amount  assigned  shall  correspond  with  one  or  more  of  the  denomina- 
tions in  which  the  bonds  are  issued. 


\ 


334 

Registered  bonds  should  not  be  assigned  in  blank,  as  that  makes  them 
payable  to  bearer,  and  so  the  title  would  pass  by  delivery. 

A  detached  assignment  should  never  be  resorted  to,  except  when  the 
blank  form  for  assignment  on  the  bond  shall  have  been  already  used; 
and  then  only  when  there  shall  not  be  sufficient  space  somewhere  on 
the  back  of  the  bond  for  another  assignment.  The  payee  should  sign 
the  assignment,  as  name  is  written  on  face  of  the  bond.  If  the  bond  be 
issued  to  a  firm,  the  assignment  must  be  in  the  name  of  the  firm  by  a 
member  thereof  who  has  authority  to  sign  for  the  firm,  of  which  author- 
ity the  officer  witnessing  the  signature  must  be  satisfied;  if  issued  to 
joint  owners,  co-trustees,  executors,  administrators,  or  guardians,  each 
person  must  sign  for  himself;  if  to  a  corporation  or  company,  the  offi- 
cial character  of  the  person  executing  the  assignment,  and  the  authority 
of  such  person  to  dispose  of  the  bond,  should  be  duly  verified  by  vote  or 
resolution  of  the  board  of  directors  of  the  corporation  or  company, 
certified  under  its  seal,  and  this  certified  copy  should  be  lodged  with 
the  Register  of  the  Treasury.  Where  such  officer  is  authorized  oy 
virtue  of  his  office  to  execute  the  assignment,  a  certificate,  under  seal, 
of  this  fact  and  of  his  election  to  the  office,  and  that  he  still  holds  and 
exercises  such  office,  must  be  furnished  together  with  a  certified  copy 
of  the  charter  or  by-laws  of  such  corporation  or  company,  showing  the 
authority  claimed  thereunder. 

All  such  evidence  of  authority  will  be  placed  on  file  in  the  Depart- 
ment, and,  if  general  and  permanent  in  its  character,  need  not  be  repro- 
duced in  subsequent  transactions  under  the  same  power,  if  proper  refer- 
ence be  made  thereto. 

Assignments  by  Representatives  and  Successors. — In  case  of  death 
or  successorship,  the  representative  of  the  deceased  person,  or  the  suc- 
cessor, must  furnish  official  evidence  of  such  decease  or  successorship, 
and  of  his  own  appointment,  authority,  or  power.  An  executor  or  ad- 
ministrator may  assign  bonds  standing  in  name  of  the  deceased  person 
in  whose  stead  such  executor  or  administrator  shall  be  acting.  Where 
there  are  two  or  more  legal  representatives,  all  must  unite  in  the  as- 
signment, unless  by  a  decree  of  court  or  testamentary  provision  some 
one  or  more  of  them  is  or  are  designated  and  empowered  to  dispose  of 
the  bonds.  If  the  bonds  had  been  neld  by  the  deceased  in  the  capacity 
of  a  fiduciary  or  trustee,  a  court  having  jurisdiction  must  appoint  a  suc- 
cessor, who  should  execute  the  assignment  in  order  to  secure  the  trans- 
fer or  payment  of  the  bonds. 

An  executor,  administrator,  trustee,  guardian,  or  attorney  cannot  as- 
sign bonds  to  himself,  unless  he  be  specially  authorized  to  do  so  by  a 
court  possessing  jurisdiction  of  the  matter.  The  order  of  court  may 
read  as  follows : 


335 
State  of , 


County  of 


■■} 


In  the  Probate  Coubt  of  Said  Countt. 
In  the  Matter  of  Estate  of  Richard  Roe,  Deceased;  John  Doe,  Admin- 
istrator. 

Be  it  remembered  that  on  this  the day  of ,  190 — ,  it  is 

made  to  appear  to  the  satisfaction  of  the  court,  upon  the  petition  of 
John  Doe,  administrator  of  the  estate  of  Richard  Roe,  deceased,  and 
upon  the  evidence  submitted  at  the  hearing,   that  said  John  Doe  is 

justly  and  legally  entitled  in  his  own  right  to  the United  States 

registered  per  cent,  bonds,  for  $ each,  numbered  

and ,  and  inscribed  in  the  name  of  said  Richard  Roe:   It  is  now, 

therefore,  adjudged  and  decreed  that  said  John  Doe,  as  such  admin- 
istrator, be  authorized  to  assign  said  bonds  to  himself  (or,  it  is  ad- 
judged and  decreed  that  the  assignment  of  said  bonds  heretofore  exe- 
cuted, to  wit,  on ,  190 — ,  by  said  John  Doe,  as  such  administrator, 

to  himself  as  an  individual,  is  now  hereby  in  all  things  ratified  and  con- 
firmed), to  the  end  that  he  may  have  new  bonds  issued  in  his  name  and 
his  title  thus  perfected. 


Judge  of  said  Court. 

The  clerk  of  said  court  should  certify  to  the  official  character  of  the 
judge,  the  genuineness  of  his  signature,  the  correctness  of  the  copy, 
and  affix  the  seal  of  the  court.  And  the  judge  should  make  a  like  certi- 
ficate as  to  the  authority  and  signature  of  the  clerk. 

Foreign  Successorship  Assignments. — ^Where  a  payee,  at  the  time 
of  his  death,  was  a  resident  of  a  foreign  country,  the  party  claiming 
to  direct  and  execute  the  transfer  must  furnish  an  exemplified  copy  of 
the  will  or  other  instrument  conveying  the  requisite  authority,  duly  cer- 
tified under  the  hand  and  seal  of  the  proper  officer,  attested  by  the  cer- 
tificate of  a  United  States  minister,  charge,  consul,  vice-consul,  or  com- 
mercial agent,  or,  if  there  be  none  such  accessible  (which  fact  shall,  in 
such  case,  be  certified),  by  that  of  a  notary  public,  to  the  effect  that 
such  exemplified  copy  is  executed  and  granted  by  the  proper  tribunal 
or  officer,  and  is  in  due  form  and  according  to  the  laws  of  that  country. 
The  assignment  should  be  executed  as  hereinbefore  directed. 

Assignments  by  Attorney. — Persons  entitled  to  assign  bonds  may 
appoint  for  that  purpose  an  attorney,  who,  by  virtue  of  the  authority 
so  conferred,  can  execute  the  assignment  in  the  same  manner  as  pro- 
vided for  the  constituent,  and  can  appoint  one  or  more  substitutes,  for 
that  purpose;  but  an  attorney  or  substitute  must  not  assign  the  bonds 
to  himself  individually. 


336 

Where  in  a  foreign  country  it  is  the  custom  to  file  powers  of  attorney 
in  public  offices  and  furnish  certified  copies  therefrom,  a  certified  copy, 
properly  authenticated  by  the  United  States  Minister,  charg6,  consul, 
vice-consul,  or  commercial  agent  may  be  accepted;  but  in  all  other 
cases  the  original  power  of  attorney  must  be  filed  with  the  Department. 

No  officer  of  the  Treasury  of  the  United  States  should  be  selected  as 
such  attorney. 

Powers  of  attorney  authorizing  the  assignment  of  bonds  should  be 
sent,  for  record,  to  the  Register  of  the  Treasury. 

FOBM   OF   POWEE  OF  AtTOBNET. 

Know  aix  men  by  these  presents. 

That  I, -,  do  hereby  appoint my  attorney 

to  assign  any  and  all  United  States  bonds  now  standing  (or  which  may 
hereafter  stand)  in  my  name  on  the  books  of  the  Treasury  Department, 
granting  to  said  attorney  full  power  to  appoint  one  or  more  substitutes 
for  that  purpose,  hereby  ratifying  and  confirming  all  that  may  be 
lawfully  done  by  virtue  hereof. 

Witness  my  hand  and  seal  this  the day  of ,  A.  D.  18 — . 

.     [seal.] 

Eixecuted  before  me  this  the day  of ,  A.  D.  18 — . 


[Official  seal.] 

Note. — To  be  acknowledged  before  an  officer  authorized  to  take  ac- 
knowledgments. 

FOBM    OF    AUTHOEITT    BT    RESOLUTION     (NO.    1). 

At  a  regular  meeting  of  the  board  of  directors  of  the  


-,  of , ,  held ,  18—,  it  was,  on  motion, 


"Resolved,  That  A.  B.,  president,  and  C.  D.,  cashier,  are,  or  either  of 
them  is,  hereby  authorized  and  empowered  to  assign  any  and  all 
United  States  bonds  now  standing  (or  which  may  hereafter  stand)  in 
the  name  of  this  bank  lor  institution]." 

I  certify  that  the  above  is  a  true  copy  from  the  minutes. 


[Corporate  seal.]  Secretary  of  the  Board. 

Note. — This  resolution  should  be  certified  by  some  office'*  of  the  insti- 
tution other  than  the  one  empowered  to  assign  the  bonds. 

FOBM    OF    AUTHOEITY    BY    RESOLUTION     (No.    2). 

At  a  regular  meeting  of  the  board  of  directors  of  the ,  held  at 


-,  on  the day  of ,  A.  D.  190 — ,  it  was 


Resolved,  That  the  president and  the  be,  and 

they  are  hereby,  jointly  and  severally,  authorized  and  empowered  to  sell. 


337 

assign  and  transfer  all  or  any  U.  S.  registered  bonds  now  standing,  or 

which  may  hereafter  be  registered  in  the  name  of upon 

the  books  of  the  U.  S.  Treasury  Department,  and  to  appoint  one  or 
more  attorneys  for  that  purpose;  and  also,  all  or  any  U.  S.  registered 

bonds  which  this now  owns  and  holds,  or  may  hereafter 

acquire,  by  assignment  or  mesne  assignments  from  the  party  in  whose 
name  the  same  is  inscribed,  with  full  power  to  appoint  a  substitute; 

and  also,  as  the  representative  of  this ,  all  or  any  U.  S.  registered 

bonds  which  this is,  or  shall  be,  authorized  and  empow- 
ered to  sell,  assign,  and  transfer  as  attorney  for  the  owners  and  holders 
thereof,  with  full  power  to  appoint  a  substitute. 

I  certify  the  foregoing  to  be  a  true  copy  from  the  minutes. 

[SEAL.]  9 


Secretary  of  Board  of 


Note. — This  resolution  should  be  certified  by  some  ofllcer  of  th«  insti- 
tution other  than  the  one  empowered  to  assign  the  bonds. 

When  passed  at  a  special  meeting,  the  certificate  must  be  signed 
by  two  oflacers. 

This  second  form,  it  will  be  seen,  is  more  comprehensive,  giving  the 
person  designated  authority  to  assign  not  only  bonds  in  the  name 
of  the  corporation  or  institution  interested,  but  also  bonds  held  by  it  in 
a  fiduciary  capacity  and  such  bonds  as  it  may  acquire  by  assignment 
or  mesne  assignments. 

It  is  recommended  that  resolutions  be  adopted  only  at  regular  meet- 
ings. But  when  passed  at  a  special  meeting,  the  certificate  may  be  as 
follows : 

We  certify  that  at  a  special  meeting  of  the  board  of  directors  of 

,  duly  held  at  ,  on  the  day  of  ,  at  —  o'clock 

—  M.,  19 — :,  the  foregoing  resolution  was  adopted,  and  is  now  in 
full  force. 

And  we  certify  that  notice  was  duly  given,  personally,  to  all  the 
members  of  the  said  board  of  directors  of  the  time  and  place  of  said 

meeting,  and  of  the  object  thereof,  for  more  than  days  prior 

thereto,  and  in  time  to  enable  all  to  attend  said  meeting;  and  that  at 
such  meeting  so  held  a  quorum  of  all  the  members  of  said  board  was 
present  and  voted  for  the  adoption  of  said  resolution. 

FoBM  OF  Authority  Under  By-laws. 


At  the  annual  meeting  of  the  stockholders  of  the , 

of  ,  — ^,  held  ,  19 — , was  duly  elected  president, 

and  was  duly  elected  cashier;    and  as  such  they  are 

jointly  or  severally  empowered  by  the  by-laws  (a  certified  copy  of 
which  is  hereto  annexed)  to  sell  and  assign  any  and  all  United  States 
bonds  now  standing  (or  which  may  hereafter  stand)   in  the  name  of 

this  bank  [or  institution].  , 

[Seal  of  bank  or  institution.]  Secretary, 


338 

Acknowledgments  of  Assignments,  when  not  made  at  the  Treasury 
Department,  must  be  made  either  before  an  Assistant  Treasurer  of  the 
U.  S.,  a  U.  S.  judge  or  district  attorney,  clerk  of  a  U.  S.  court,  collector 
of  customs  or  internal  revenue,  or  president,  vice-president  or  cashier 
of  a  National  bank.  The  witnessing  officer  should  append  his  official 
title  and  affix  his  seal  of  office,  if  he  have  one;  if  he  have  no  seal  of 
office,  he  should  certify  such  to  be  the  fact.  The  president,  vice-presi- 
dent or  cashier  of  a  National  bank  must  append  the  title  and  affix  the 
seal  of  the  bank.  The  impress  of  the  seal  must  in  every  case  be  made 
upon  the  bond. 

Fobeign  Acknowxedgments  may  be  made  before  a  United  States  min- 
ister, charg6,  consul,  vice-consul,  or  commercial  agent.  A  notary  pub- 
lic, or  other  competent  officer,  in  a  foreign  country  may  take  ac- 
knowledgments; but  his  official  character  and  jurisdiction  must  be 
properly  verified.  (See  under  head  "Foreign  successorship  assign- 
ments.") The  official  seal,  where  there  is  one,  should  in  all  cases  be 
affixed,  as  per  foregoing  direction;  and  where  there  is  none  this  fact 
should  be  made  known  and  attested. 

Tbanslations. — Powers  of  attorney,  and  all  other  legal  documents 
executed  in  the  United  States,  must  be  in  the  English  language.  If 
executed  abroad  in  any  other  language,  such  powers  must  be  accom- 
panied by  an  accurate  translation  into  English,  and  by  a  sworn  certifi- 
cate of  the  person  who  made  such  translation,  properly  acknowledged 
before  a  notary  public  or  other  competent  officer  having  a  seal,  to  the 
effect  that  the  translation  is  correct  and  complete. 

Execution  of  Powers. — Powers  of  attorney  for  the  transfer  of  bonds 
must  be  acknowledged  in  the  presence  of  some  one  of  the  officers 
authorized  to  take  acknowledgments  of  assignments;  and  where  such 
officer  has  an  official  seal  it  must  be  affixed;  where  he  has  none  he 
should  so  state. 

PowEBS  OF  Substitution  must  be  executed  and  acknowledged  in  the 
same  manner  as  powers  of  attorney,  and  should  likewise  follow  the 
same  general  form. 

Transmission  of  Bonds. — ^When  registered  bonds  are  properly  as- 
signed, they  should  be  transmitted  to  the  Register  of  the  Treasury  for 
reissue,  and  should  be  accompanied  by  a  letter  of  explicit  instructions, 
stating  the  amount  enclosed,  the  loan  to  which  the  bonds  belong,  the 
denominations  of  the  bonds  desired  in  exchange  therefor,  the  name 
and  residence  of  each  assignee,  and  the  post  office  address  to  which  it  is 
desired  the  interest  checks  shall  be  mailed. 


339 

When  bonds  of  different  loans  are  forwarded  in  one  remittance,  a 
separate  letter  of  instructions  should  accompany  the  bonds  of  each  loan. 

When  coupon  and  registered  bonds  are  transmitted  at  the  same  time, 
the  former  should  be  sent  to  the  Secretary  of  the  Treasury,  and  the  lat- 
ter to  the  Register  of  the  Treasury.  For  form  of  letter  to  the  Secretary 
see  under  coupon  bond. 

FoBM  OF  Letteb  Tbansmitting  Registeeed  Bonds  foe  Tbansfee. 

Registeb  of  the  Treasuby. 

Sib  :  Herewith  you  will  receive  $ U.  S.  registered  bonds  of  the 

per  cent,  loan  of  ,  which  please  transfer,  per  as  assign- 
ment, to of , . 


Please  send  the  new  bonds  to  the  subscribed  address. 

Mail  checks  for  the  interest  to , ,  • 

Very  respectfully,  — 


No  fees  will  be  charged  by  a  United  States  minister,  charge,  consul, 
vice-consul,  or  commercial  agent  for  witnessing  and  certifying  an  as- 
signment of,  or  power  to  assign,  bonds,  or  collect  interest  thereon.  No 
charge  is  made  by  the  Department  for  transferring  registered  bonds. 

New  Bonds. — Registered  bonds  received  for  transfer  are  cancelled, 
and  new  bonds  in  their  stead  are  issued  in  the  name  of  the  assignee. 
These  bear  interest  from  the  first  day  of  the  quarter  or  half  year  (as 
their  interest  term  may  run)  in  which  the  transfer  shall  have  been 
made.  As  a  rule,  returns  are  made  on  the  same  day  that  the  bonds  are 
received^  and  made  invariably  by  registered  mail  unless  otherwise  in- 
structed. When  bonds  are  sent  or  returned  by  express  the  entire  ex- 
pense thus  incurred  must  be  borne  by  the  party  desiring  the  transfer. 

Date  of  Interest  Payments. — ^The  interest  on  registered  bonds  of  the 
existing  loans  falls  due  upon  the  following  dates,  respectively  : 

Three  per  cent,  loan  of  1908-1918 Feb.  1;  May  1;  August  1;  Nov.  1 

Four  per  cent,  funded  loan  of  1907 Jan.  1;  April  1;  July  1;  Oct.  1 

Four  per  cent,  loan  of  1925 Feb.  1;  May  1;  August  1;  Nov.  1 

Two  per  cent,  consols  of  1930 Jan.  1;  April  1;  July  1;  Oct.  1 

Four  per  cent.  Philippine  loan Feb,  1;  May  1;  August  1;  Nov.  1 

District  of  Columbia  3.65  per  cent Feb.  1  and  August  1 

The  two  latter  are  not  United  States  loans,  but  records  of  same  are 
kept  and  transfers  are  made  at  the  Department. 

Inteeest — How  Paid. — Interest  on  registered  bonds  of  the  above-de- 
scribed loans  is  paid  by  check,  which  is  sent  by  mail;  when  address  is 
not  known  checks  will  be  held  by  the  Treasurer  until  called  for  by  the 
payees  thereof. 


340 

The  checks  are  payable,  when  properly  indorsed,  on  presentation  at 
the  U.  S.  Treasury  or  at  the  oflBlce  of  any  Assistant  Treasurer  of  the 
United  States. 

Holders  of  these  bonds  should  notify  the  Register  of  the  Treasury  of 
any  change  in  their  post-ofl&ce  address  at  least  fifteen  days  before  the 
interest  falls  due;  and  in  case  of  the  appointment  of  an  attorney  to  in- 
dorse the  interest  checks,  notice  of  this  fact  should  likewise  be  given  to 
the  Register.  Such  holders  should  also  transmit  to  the  Auditor  of  the 
Treasury  all  powers  of  attorney  authorizing  the  indorsement  of  interest 
checks,  and  advise  him  specifically,  at  which  of  the  offices  referred  to 
above  it  is  desired  that  the  interest  checks,  under  such  powers,  shall 
be  paid. 

Closing  of  Teansfee  Books. — For  the  purpose  of  preparing  the  in- 
terest schedules,  the  transfer  books  are  closed  during  the  month  imme- 
diately preceding  the  date  of  payment  of  the  interest,  with  the  excep- 
tion of  the  four  per  cent,  loan  of  1925,  the  Philippine  loan  and  the  Dis- 
trict of  Columbia  3.65  per  cent.  loan.  The  books  of  the  two  former  loans 
close  on  the  15th  day  of  the  months  preceding  the  date  of  the  payment 
of  interest,  and  of  the  District  of  Columbia  3.65  per  cent,  loan  the  books 
close  10  days  before  the  interest  period. 

If  bonds  forwarded  for  transfer  be  not  received  prior  to  or  upon  the 
day  fixed  for  closing  the  transfer  books,  the  transfer  will  not  be  ef- 
fected until  after  the  reopening  of  the  books;  and  consequently  the  in- 
terest for  that  quarter  or  half  year  (as  the  interest  term  may  be)  will 
be  declared  in  favor  of  the  parties  whose  names  appear  upon  the  face 
of  the  old  bonds,  and  to  them  the  assignees  must  look  for  any  interest 
claimed. 

FoBM  OF  Power  of  Attorney  to  Collect  Intebest  Checks. 

Know  all  men  by  these  presents,  that of ,  do  a.^ 

point attorney  to  receive  from  the  proper  officer 

and  to  indorse  checks  for  interest  in name  on  the  books  of  the 

Treasury  Department  of  the  United  States;  granting  to  said  attorney 
power  to  appoint  one  or  more  substitutes  for  the  purpose  herein  ex- 
pressed; hereby  ratifying  and  confirming  all  that  may  lawfully  be  done 
by  virtue  hereof. 

Witness hand-  and  seal-  this day  of ,  18 — . 

.     [L.  S.] 


[L.  S.] 


Signed,  sealed  and  acknowledged  in  the  presence  of — 
(To  be  acknowledged  as  directed  below.) 


Note.— When  intended  to  be  special,  insert  after  the  word  "  interest" 
in  this  form  [due  on  the of  the ,  19 — ,  on  all  bonds  stand- 


341 

ing  in .]     When  general,  insert  [now  due  and  which  may  here- 
after accrue  on  all  bonds  standing,  or  which  may  hereafter  stand,  in 

J 

Execution  of  Powers  of  Attorney  to  Indorse  Interest  Checks. — 
Powers  of  attorney  must  be  acknowledged  either  before  the  Treasurer  or 
an  Assistant  Treasurer  of  the  U.  S.,  a  U.  S.  judge,  U.  S.  district  attorney, 
clerk  of  the  U.  S.  court,  collector  of  customs,  collector  of  internal  reve- 
nue, president,  vice-president  or  cashier  of  a  National  bank,  or  a  notary 
public.  If  in  a  foreign  country,  powers  must  be  acknowledged  either  be- 
fore a  U.  S.  minister,  charge,  consul,  vice-consul,  commercial  agent,  or 
notary  public.  If  before  the  latter,  his  oflBcial  character  and  the  genu- 
ineness of  his  signature  must  be  properly  verified. 

The  acknowledging  officer  must  add  his  official  designation,  residence 
and  seal,  if  he  have  one;  if  he  have  no  seal  of  office,  he  should  certify 
such  to  be  the  fact. 

Powers  of  attorney  and  testamentary  evidence  designed  as  author- 
ity to  collect  interest  checks  should  be  filed  with  the  Auditor  for  the 
Treasury  Department. 

FoBM  OF  Authority  by  Resolution  for  the  Indorsement  of  Inter- 
est Checks. 


At  a  regular  meeting  of ,  held  at ,  in  the  State  of 


on  the  day  of  ,  19 — ,  a  quorum  being  present,  it  was, 

on  motion. 

Resolved,  That be,  and  is  hereby,  authorized  to  receipt 

for  and  to  indorse  checks  for  interest  due,  or  to  become  due,  on  all 

United  States  bonds  registered  in  the  name  of on  the 

books  of  the  Treasury  Department,  with  power  to  appoint  one  or  more 
substitutes  for  the  purposes  herein  expressed,  until  such  authority  is 
officially  revoked,  and  notice  of  revocation  is  properly  given  to  the 
Treasury  Department. 

A  true  copy  of  the  minutes. 

(Signed.)  ,  President. 

[SEAL.]    Attest:  ,  Secretary. 

Note. — Where  the  society  or  institution  has  no  seal,  it  will  be  re- 
quisite to  acknowledge  the  instrument  before  a  notary  or  some  other 
competent  officer  having  an  official  seal.  If  the  president,  cashier,  sec- 
retary, or  treasurer  be  authorized  to  indorse  the  checks,  the  instrument 
must  be  certified  by  an  officer  other  than  the  one  empowered  to  make 
the  indorsement. 

The  Auditor  of  the  Treasury  should  be  advised  where  interest  checks 
indorsed  by  attorneys  will  be  presented  for  payment. 


342 

Inteeest  to  Joint  Holders  of  Registered  Bonds. — Interest  will  be 
paid  to  any  one  of  several  joint  holders,  or  co-trustees,  executors,  admin- 
istrators, or  guardians;  but  in  the  execution  to  a  third  party  of  a  power 
to  collect  interest  checks  all  must  join.  In  case  of  the  death  of  any 
such  joint  holders,  co-trustees,  etc.,  the  survivor  or  survivors  will  be 
recognized  as  having  full  authority,  upon  due  proof  of  such  death  and 
survivorship. 

Payment  of  Interest  on  U.  S.  R.  Bonds  in  Name  of  Minors. — ^When 
government  bonds  are  registered  in  the  names  of  infants,  checks  issued 
in  payment  of  interest  thereon  will  be  paid  only  to  the  proper  guardian 
of  such  infants,  when  the  Secretary  of  the  Treasury  has  been  notified  of 
such  infancy. 

Neither  the  father  nor  mother  of  an  infant  has  the  right,  as  a  gen- 
eral rule,  to  indorse  or  collect  such  checks. 

The  guardian  of  an  infant,  in  order  to  indorse  and  collect  interest 
checks  in  favor  of  his  ward,  is  required  to  file  with  the  Auditor  for  the 
Treasury  Department  evidence  (1)  of  guardianship,  (2)  of  his  author- 
ity being  in  force,  and  (3)  of  the  identity  of  his  ward  as  the  payee  in 
the  bonds. 

The  Government  is  not  liable  to  refund  to  an  infant,  on  his  arriving 
at  the  age  of  majority,  money  paid  to  him  on  his  indorsement  of  checks 
during  minority,  when  the  Secretary  of  the  Treasury  had  not  been 
notified  of  the  fact  of  infancy.  (Department  Circular  No.  6,  dated 
February  7,  1881.) 

Unclaimed  Interest. — The  interest  on  registered  bonds  which  has 
been  returned  to  the  Treasury  as  unclaimed  can  be  collected  only  in 
person  or  by  attorney  at  the  U.  S.  Treasury. 

For  the  convenience  of  the  public,  and  to  save  charges,  powers  to  col- 
lect specified  unclaimed  interest  may  be  made  in  favor  of  the  Chief  of 
the  Division  of  Loans  and  Currency  of  the  Secretary's  office. 

Lost  Registered  Bonds. — In  case  of  the  loss  of  registered  bonds,  the 
Secretary  of  the  Treasury  should  be  promptly  notified,  in  order  that  a 
caveat  may  be  entered  against  the  transfer  of  the  missing  bonds  on  the 
books  of  the  department. 

Form  of  Request  for  Caveat. 

Secretary  of  the  Treasury. 

Sir  :  The  registered  bonds  described  below,  standing  in  my  name, 

were  stolen  from  the  undersigned  on  or  about  the  of  last 

Please  enter  a  caveat  against  their  transfer  : 

No. ,  for  $ ,  Act  of ,  19—, per  cent.,  and  No. ,  for 

% ,  act  of ,  19 — , per  cent. 

Very  respectfully, , 


343 

Lost  Coupon  Bonds,  Notes  and  Coupons. — The  Government  cannot 
protect,  and  will  not  undertake  to  protect,  the  owners  of  lost  coupon 
bonds  (they  being  payable  to  bearer)  and  Treasury  notes  issued  and  re- 
maining in  blank  at  the  time  of  loss,  but  such  bonds  and  notes  will  be 
paid  to  the  party  presenting  them  in  the  course  of  regular  business; 
and  no  attention  will  be  paid  to  caveats  which  may  be  filed  for 
the  purpose  of  preventing  such  payment.  (Department  Circular  of 
April  27,  1867.) 

Duplicate  fob  Destroyed  ob  Defaced  Bonds — Section  3702  R.  S. — 
Whenever  it  appears  to  the  Secretary  of  the  Treasury,  by  clear  and  un- 
equivocal proof,  that  any  interest-bearing  bond  of  the  U.  S.  has,  wholly 
or  in  part,  been  destroyed,  or  so  defaced  as  to  impair  its  value  to  the 
owner,  and  such  bond  is  identified  by  number  and  description,  the 
Secretary  of  the  Treasury  shall,  under  such  regulations  and  with  such 
restrictions  as  to  time  and  retention  for  security  or  otherwise  as 
he  may  prescribe,  issue  a  duplicate  thereof,  having  the  same  time 
to  run,  bearing  like  interest  as  the  bond  so  proved  to  have  been 
destroyed  or  defaced,  and  so  marked  as  to  show  the  original  number  of 
the  bond  destroyed  and  the  date  thereof.  But  when  such  destroyed  or 
defaced  bonds  appear  to  have  been  of  such  a  class  or  series  as  has  been 
or  may,  before  such  application,  be  called  in  for  redemption,  instead  of 
issuing  duplicates  thereof,  they  shall  be  paid,  with  such  interest  only  as 
would  have  been  paid  if  they  had  been  presented  in  accordance  with 
such  call. 

Section  3703  R.  S. — The  owner  of  such  destroyed  or  defaced  bond 
shall  surrender  the  same,  or  so  much  thereof  as  may  remain,  and  shall 
file  in  the  Treasury  a  bond  in  a  penal  sum  of  double  the  amount  of 
the  destroyed  or  defaced  bond,  and  the  interest  which  would  accrue 
thereon  until  the  principal  becomes  due  and  payable,  with  two  good  and 
sufficient  sureties,  residents  of  the  U.  S.,  to  be  approved  by  the  Secre- 
tary of  the  treasury,  with  condition  to  indemnify  and  save  harmless 
the  U.  S.  from  any  claim  upon  such  destroyed  or  defaced  bond. 

Duplicates  fob  Lost  Registebed  Bonds — Section  3704  R.  S. — When- 
ever it  is  proved  to  the  Secretary  of  the  Treasury,  by  clear  and  satis- 
factory evidence,  that  any  duly  registered  bond  of  the  U.  S.,  bearing  in- 
terest, issued  for  valuable  consideration  in  pursuance  of  law,  has  been 
lost  or  destroyed,  so  that  the  same  is  not  held  by  any  person  as  his  own 
property,  the  Secretary  shall  issue  a  duplicate  of  such  registered  bond, 
of  like  amount,  and  bearing  like  interest  and  marked  in  the  like  man- 
ner as  the  bond  so  proved  to  be  lost  or  destroyed. 

Section  3705  R.  S. — The  owner  of  such  missing  bond  shall  first  file  in 
the  Treasury  a  bond  in  the  penal  sum  equal  to  the  amount  of  such  miss- 
ing bond,  and  the  interest  which  would  accrue  thereon,  until  the  prin- 
cipal thereof  becomes  due  and  payable,  with  two  good  and  sufficient 


344 

sureties,  residents  of  the  U.  S.,  to  be  approved  by  the  Secretary  of  the 
Treasury,  with  condition  to  indemnify  and  save  harmless  the  U.  S. 
from  any  claim  because  of  the  lost  or  destroyed  bond. 

Parties  presenting  claims  on  account  of  a  coupon  or  registered  bond 
of  the  U.  S.  which  has  been  destroyed,  wholly  or  in  part,  or  on  account 
of  a  registered  bond  which  has  been  lost,  will  be  required  to  present 
evidence  showing  : 

1.  The  number,  denomination,  date  of  authorizing  act,  and  rate  of  in- 
terest of  such  bond;  whether  coupon  or  registered;  and,  if  registered, 
the  name  of  the  payee.  In  the  case  of  a  registered  bond,  it  should  also 
be  stated  whether  it  had  been  assigned  or  not  previous  to,  or  since,  the 
alleged  loss  or  destruction,  and,  if  assigned,  by  whom,  and  whether  as- 
signed in  bank  or  to  some  person  specifically  by  name;  and  if  assigned 
in  the  latter  manner  the  name  of  the  assignee  should  be  given. 

2.  The  time  and  place  of  purchase,  of  whom  purchased,  and  the  con- 
sideration paid. 

3.  The  place  of  deposit  of  the  missing  bond;  whether  or  not  any  per- 
son or  persons,  other  than  the  owner,  had  access  thereto;  and  in  the 
event  of  its  having  been  accessible  to  other  parties,  their  affidavits,  in 
addition  to  that  of  the  owner,  should  be  furnished,  showing  their 
knowledge  of  the  existence  of  the  bond,  and  of  the  fact  of  its  loss  or 
destruction. 

4.  The  material  facts  and  circumstances  connected  with  the  loss  or 
destruction  of  the  bond. 

5.  It  should  be  shown  by  the  affidavits  of  credible  persons,  if  prac- 
ticable by  U.  S.  officers,  that  the  statements  of  the  claimant  as  set  forth 
in  his  affidavit  are  worthy  of  the  confidence  of  the  Department,  and 
that  he  is  the  identical  person  named  in  the  application. 

6.  Affidavits  sworn  to  before  a  notary  public,  a  United  States  commis- 
sioner or  a  justice  of  the  peace  must  be  accompanied  by  a  certificate 
from  the  proper  court  showing  that  the  officer  was  in  commission  on 
the  date  of  the  execution  of  the  document. 

In  all  cases  the  evidence  should  be  as  full  and  clear  as  possible,  that 
there  may  be  no  doubt  of  the  good  faith  of  the  claimant.  Proofs  may 
be  made  by  affidavits  duly  authenticated,  and  by  such  other  competent 
evidence  as  may  be  in  the  possession  of  the  claimant. 

Genebal  Form  of  Affidavit. 


I 


ss : 

Personally  appeared  before  me,  a  notary  public  in  and  for  the  city 

of ,  county  of and  State  of ,  the  subscriber,  

,  of  ,  county  of  — ,  and  State  of  ,  who,  being 


duly  sworn  according  to  law,  deposes  and  says  that is  the  lawful 

owner   of   the    following   described    registered    bonds    of    the    United 
States,  viz.: 


345 

No.  ,  for  $ ,  act  of  ,  19—.  per  cent.,  and  No.  — — , 

for  $ ,  act  of  ,  19—,  per  cent.,  registered  in  name 

on  the  books  of  the  Treasury  Department,  ,  19—;  that  no  assign- 
ment or  transfer  of  said  bonds  [or  either  of  them]  has  been  made  or 

authorized  by or attorney,  either  in  blank  or  by  a  specific 

assignment,  or  in  any  manner  whatever;  that  said  bonds  have  not,  nor 
has  either  of  them,  by  hypothecation,  pledge,  loan,  or  otherwise,  passed 
from  the  custody  or  control  of  said  ,  (his  or  her)  knowl- 
edge or  consent;  that  the  said  bonds  were  stolen  from ,  the  said 

^  at ,  on  the ,  by  some  person  or  persons  un- 
known to ;  and  that  due  diligence  has  been  exercised  in  endeav- 
oring to  recover  the  said  bonds,  without  success.     [State  what  has 

been  done.]  » 

of , . 


Sworn  to  and  subscribed  before  me  this  the  day  of 


A.  D.,  18—.    And  I  certify  that  said is  personally  well 

known  to  me  to  be  the  identical  person  mentioned  in  the  foregoing 

afladavit.  » 

[NOTARIAL  SEAL.]  Ifotary  Public. 

Affidavits  and  other  evidence  pertaining  to  the  claim  should  be  trans- 
mitted to  the  Secretary  of  the  Treasury.  Upon  receipt  of  such  docu- 
mentary evidence  it  will  be  referred  to  the  Comptroller  of  the  Treasury 
for  his  opinion  as  to  its  sufficiency.  The  applicant  will  be  advised  of 
the  decision  as  soon  as  it  is  reached.  If  it  he  favorable  to  such  ap- 
plicant, a  blank  indemnity  bond  will  be  forwarded  to  him  for  execution; 
and  when  this  indemnity  bond  shall  have  been  duly  executed,  returned 
to  the  Department,  and  approved  by  the  Comptroller  of  the  Treasury 
and  the  Secretary,  the  relief  desired  will  be  granted. 

Sections  3703  and  3705  of  the  Revised  Statutes  require  that  the  per- 
son giving  a  bond  of  indemnity  shall  furnish  two  good  and  sufficient 
sureties,  residents  of  the  United  States,  to  be  approved  by  the  Secretary 
of  the  Treasury.  The  act  of  August  13,  1894,  however,  authorizes  the 
acceptance  of  a  surety  company,  duly  incorporated,  in  lieu  of  the  two 
sureties  provided  for  in  the  sections  above  quoted.  When  a  surety 
company  has  been  duly  accepted  by  the  Treasury  Department  its  suffi- 
ciency need  not  be  certified  as  is  required  in  the  case  of  personal 
sureties. 

A  duplicate  in  lieu  of  a  lost  registered  bond  will  not  be  issued 
within  six  months  from  the  time  of  the  alleged  loss. 

The  interest  on  an  uncalled  registered  bond  will  be  paid  to  the  payee 
thereof  even  though  the  bond  has  been  lost  or  destroyed. 

Under  a  decision  of  the  Attorney-General  of  the  U.  S.  of  January  29, 
1878,  the  Secretary  of  the  Treasury  cannot  give  relief  in  cases  where 
coupons  previously  detached  from  the  bonds  have  been  destroyed.  The 
decision  makes  a  distinction  between  coupons  destroyed  when  still  at- 
tached to  the  bond  and  those  detached  and  afterwards  destroyed.  In 
24 


346 


the  fonner  case  it  would  amount  to  a  partial  destruction  or  defacement 
of  the  bonds  themselves;  in  the  latter,  the  coupons  form  no  part  of  the 
bonds,  but  are  then  the  basis  for  independent  claims,  possessing  all  the 
essential  attributes  of  commercial  paper.  That  is,  a  claimant  for  relief 
for  a  coupon  destroyed  while  still  attached  to  bond  can  get  it  from  the 
Secretary  of  che  Treasury,  under  the  provisions  of  Section  3702;  but  if 
destroyed  after  detachment,  the  claimant  must  present  his  claim  in  the 
usual  manner,  and  await  action  of  Congress. 

Called  Bonds. — Atl  U.  S.  called  bonds  forwarded  for  redemption 
should  be  addressed  to  the  Secretary  of  the  Treasury,  Division  of  Loans 
and  Currency.  When  registered  bonds  are  so  forwarded  they  should 
be  assigned  to  "  the  Secretary  of  the  Treasury  for  redemption."  As- 
signments must  be  dated  and  properly  acknowledged,  as  prescribed  in 
the  note  printed  on  the  back  of  each  bond. 

Where  checks  in  payment  of  registered  bonds  are  desired  in  favor  of 
any  one  but  the  payee,  the  bonds  should  be  assigned  to  the  "  Secretary 
of  the  Treasury  for  redemption  for  account  of" — (here  insert  the  name 
of  the  person  or  persons  to  whose  order  the  check  should  be  made 
payable.)  A  party  cannot,  as  attorney,  assign  bonds  for  redemption  for 
account  of  himself  as  an  individual. 

Coupons  Detached  from  Called  Bonds. — In  accordance  with  a  de- 
cision of  the  Attorney-General,  January  29,  1878,  the  Treasury  regards 
a  coupon  detached  from  a  bond  of  the  United  States  as  a  separate  obli- 
gation, the  holder  of  which  is  entitled  to  receive  the  face  value  thereof 
at  any  time  after  its  maturity  on  presentation.  The  rule  is  therefore 
established  that  United  States  coupon  bonds  which  have  been  called  for 
redemption  should  have  attached  to  them,  when  presented  for  payment, 
all  of  the  unmatured  coupons.  If  any  such  coupons  are  missing,  their 
face  value  will  be  deducted  from  the  proceeds  of  the  bonds  when  re- 
deemed, and  will  be  held  in  the  Treasury  for  the  redemption  of  such 
missing  coupons  when  they  are  presented. 

Detached  coupons,  belonging  to  called  bonds,  maturing  on  dates  sub- 
sequent to  the  date  of  maturity  of  the  bonds,  will  not  be  paid  at  the 
subtreasuries  of  the  United  States,  but  should  be  forwarded  to  the 
Treasury  Department  at  Washington  for  payment. 

All  correspondence  in  relation  to  bonds  that  have  been  called  in  for 
redemption,  or  coupons  belonging  thereto,  should  be  addressed  to  the 
"  Division  of  Loans  and  Currency,"  Secretary's  office. 

Exemption  of  United  States  Bonds  from  Taxation. — Section  3701  of 
the  Revised  Statutes  provides  as  follows:  "All  stocks,  bonds.  Treasury 
notes,  and  other  obligations  of  the  United  States  shall  be  exempt  from 
taxation  by  or  under  State  or  municipal  or  local  authority."  This  sec- 
tion makes  the  exemption  from  taxation  binding  only  upon  "  State  or 


347 

municipal  or  local  authority;"  but,  according  to  the  express  terms  of 
the  act  of  Congress  of  July  14,  1870,  the  bonds  and  the  Interest  there- 
on of  the  funded  loans  which  are  thereby  authorized — namely,  the  loan 
of  1881,  the  loan  of  1891,  and  the  four  per  cent,  consols  of  1907 — "  shall 
be  exempt  from  the  payment  of  all  taxes  or  duties  of  the  United  States, 
as  well  as  from  taxation  in  any  form  by  or  under  State,  municipal,  or 
local  authority;  and  the  said  bonds  shall  have  set  forth  and  expressed 
upon  their  face  the  above  specified  conditions."  (See  also  Section  5219, 
Revised  Statutes.) 

BONDS  OF  THE  UNITED  STATES. 

Interest  Beaeinq.* 

Consols  of  1907:  Act  July  14,  1870,  and  January  20,  1871,  4  per  cent., 
payable  July  1,  1907. 

Ten-twenties  of  1898:  June  13,  1898,  3  per  cent,  payable  after  August 
1,  1908. 

Loan  of  1925:  Act  January  14,  1875,  4  per  cent.,  payable  February  1, 
1925. 

Consols  of  1930:  Act  of  March  14,  1900,  2  per  cent.,  payable  April 
1,  1930. 

Bonds  Matured  and  Interest  Ceased. — ^Loan  of  1858,  June  14,  1858, 
5  per  cent.,  payable  15  years  from  January  1,  1859. 

Fives  of  1860:  June  22,  1860,  5  per  cent.,  payable  10  years  from 
January  1,  1861. 

Sixes  of  1880  :  February  8,  1861,  6  per  cent.,  payable  December 
31,  1880. 

Oregon  "War  Loan  :  March  2,  1861,  6  per  cent.,  payable  20  years  from 
July  1,  1861. 

Sixes  of  1881:  March  3,  1863  (continued  April  11,  1881),  3i^  per 
June  30,  1881. 

Five-Twenties  of  1862  :  February  25,  1862,  6  per  cent.,  payable  after 
5  and  within  20  years  from  May  1,  1862. 

Currency  Sixes  Pacific  R.  R.  :  July  1,  1862,  and  July  2,  1864  (issued 
1865-1869),  6  per  cent.,  payable  in  30  years. 

Sixes  of  1881  :  March  3,  1863,  6  per  cent,  payable  June  30,  1881. 

Five-twenties  of  1864  :  March  3,  1864,  6  per  cent.,  payable  after  5  and 
within  20  years  from  November  1,  1864.  R 

Ten-forties:  March  3,  1864,  5  per  cent.,  payable  after  10  and  within 
40  years  from  March  1,  1864. 

Five-twenties  of  1864:  June  30,  1864,  6  per  cent.,  payable  after  5  and 
within  20  years  from  November  1,  1864. 

Five-twenties  of  1865:  March  3,  1865,  6  per  cent.,  payable  after  5  and 
within  20  years  from  November  1,  1865. 

Consols  of  1865:  March  3,  1865,  6  per  cent.,  payable  after  5  and 
within  20  years  from  July  1,  1865. 


348 

Consols  of  1867:  March  3,  1865,  6  per  cent.,  payable  after  5  and  with- 
in 20  years  from  July  1,  1867. 

Consols  of  1868:  March  3,  1865,  6  per  cent.,  payable  after  5  and  with- 
in 20  years  from  July  1,  1868. 

Funded  Loan  of  1881:  July  14,  1870,  and  January  20,  1871,  5  per  cent., 
payable  after  May  1,  1881. 

Sixes  of  1881:  July  17,  and  August  5,  1861  (continued  April  11, 
1881),  314  per  cent.,  payable  at  pleasure  of  U.  S. 

Sixes  of  1881:  March  3,  1863,  (continued  April  11,  1881),  3%  per 
cent,  payable  at  pleasure  of  U.  S. 

Funded  Loan  of  1881:  July  14,  1870,  and  January  20,  1871  (  continued 
May  12,  1881),  3%  per  cent,  payable  at  pleasure  of  U.  S. 

Funded  Loan  of  1882:  July  12,  1882,  3  per  cent.,  payable  at  pleasure 
of  U.  S. 

Funded  Loan  of  1891:  July  14,  1870,  and  January  20,  1871,  4%  per 
cent.,  continued  at  2  per  cent.,  payable  at  pleasure  of  U.  S. 

Five  per  cent,  loan  of  1904:  July  14,  1870,  and  January  14,  1875, 
issued  February,  1894,  payable  in  10  years. 

INDORSEMENT  OF  TREASURY  DRAFTS. 

The  name  of  the  payee,  as  indorsed,  must  correspond  in  spelling  with 
that  on  the  face  of  the  draft;  no  guarantee  of  an  indorsement,  imper- 
fect in  itself,  can  be  accepted.  If  the  name  of  a  payee,  as  written  on 
the  face  of  a  draft,  is  spelled  incorrectly,  the  draft  should  be  returned 
to  the  Treasurer  of  U.  S.  for  correction. 

Indorsements  by  mark  (X)  must  be  witnessed  by  two  persons  who 
can  write,  giving  their  places  of  residence. 

Indorsements  by  executors,  administrators,  guardians  or  other 
fiduciaries  must  be  accompanied  by  certified  copies,  under  seal,  of  let- 
ters testamentary,  letters  of  administration,  of  guardianship,  or  other 
evidence  of  fiduciary  character,  as  the  case  may  be. 

Payees  and  indorsees  must  indorse  by  their  own  hands;  oflScials, 
oflScially  with  full  title;  firms,  the  usual  firm-signature  by  a  member 
of  the  firm,  not  by  a  clerk  or  other  person  for  the  firm. 

Every  indorsement  must  be  by  the  proper  written  (not  printed) 
signature  of  the  person  whose  indorsement  is  required. 

Powers  of  attorney  for  the  indorsement  of  drafts  in  payment  of 
claims  must  state  the  number,  date  and  amount  of  draft,  and  number 
and  kind  of  warrant,  and  be  dated  subsequently  to  the  date  of  the 
drafts;  must  be  witnessed  by  two  persons,  and  must  be  acknowledged 
by  the  constituent  before  the  Treasurer  of  the  U.  S.  or  an  Assistant 
Treasurer,  a  judge  or  clerk  of  a  District  Court  of  the  U.  S.,  a  collector 
of  customs,  a  notary  public  under  his  seal,  or  a  justice  of  the  peace  in 
those  States  only  in  which  such  justice  has  authority  to  take  acknowl- 
edgments of  deeds,  or  commissioner  of  deeds ;  if  before  either  of  the  two 


349 

latter,  the  certificate  and  seal  of  the  county  clerk  as  to  the  official 
character  and  signature  of  the  justice  or  commissioner  is  required. 

If  executed  in  a  foreign  country,  the  acknowledgment  must  be  made 
before  a  notary  public  with  his  seal  attached,  or  a  U.  S.  Consul  or  Min- 
ister. The  officer  taking  the  acknowledgment  must  certify  that  the 
letter  of  attorney  was  read  and  fully  explained  to  the  constituents  at 
the  time  of  acknowledgment,  and  that  said  constituent  is  personally 
well  known  to  him  to  be  the  identical  person  named  in  and  who  sub- 
scribed his  name  to  said  power  of  attorney.  (See  Revised  Statutes, 
sections  1778  and  3477.) 

Evidence  of  authority  to  indorse  for  incorporated  or  unincorporated 
companies  must  accompany  drafts  drawn  or  indorsed  to  the  order  of 
such  companies  or  associations.  Such  evidence  should  be  in  the  form 
of  an  extract  from  the  by-laws  or  records  of  the  company  or  association, 
showing  the  authority  of  the  officer  to  indorse  and  receive  and  receipt 
for  moneys  for  the  company,  and  giving  his  name  and  the  date  of  his 
election  or  appointment,  which  extract  must  be  verified  by  a  certificate 
under  seal  signed  by  the  president  and  secretary,  or  by  one  of  these 
officers  and  not  less  than  two  of  the  directors;  which  certificate  must 
state  that  such  authority  remains  unrevoked  and  unchanged.  If  the 
company  have  no  seal,  the  extract  should  be  certified  as  correct  by  a 
notary  public  or  other  competent  officer  under  his  seal.  When  a  resolu- 
tion is  adopted  at  a  special  meeting  of  directors,  it  must  be  shown  that 
all  had  notice  of  the  time  and  place  of  such  meeting,  and  that  a  quorum 
assented  to  the  resolution. 

In  cases  where  an  individual  or  a  copartnership  is  doing  business 
under  a  company  title,  the  affidavit  of  the  owner  or  of  the  members  of 
the  copartnership  will  be  required,  showing  the  fact  of  ownership  and 
naming  the  person  who  is  authorized  to  indorse  and  receive  and  receipt 
for  moneys  for  the  owners. 

The  indorsement  of  all  the  joint  holders  or  co-trustees,  executors,  ad- 
ministrators, guardians  or  other  fiduciaries  will  be  required  on  drafts, 
and  in  the  execution  of  a  power  to  a  third  pari:y  to  collect,  all  must  join. 
In  case  of  death  of  either,  the  survivors  will  be  recognized  as  having 
full  authority  upon  due  proof  of  such  death  and  survivorship. 


GENERAL  INDEX. 


A 

PAGE 

Accommodation  Paper — Association  cannot  lenc}  its  credit 18 

Acknowledgment — Assignment  of  bonds 333 

Assignment  of  bonds  in  foreign  countries 338 

Execution  of  organization  certificate 9 

Actions — (See  Suits). 
Administrators — (See  Trustees). 
Advertisement — (See  also  Notice;  Publication). 

Imitation  of  circulating  notes,  penalty  for 91 

Agency — National   Bank  note  redemption , 92 

Agent — Association  as  fiscal  of  Government: 65 

Association  as,  not  claim  ultra  vires  in  defence 23 

Corporator  may  act  by 202 

Director  not  ex-officio  of  Association 46 

For  purchase  of  U.  S.  Bonds ► 222 

Liquidating  Association 250 

Of   association,    to    examine   bonds   with    Treasurer   and    witness    de- 
struction of  mutilated  notes  and  form  of  power  of  attorney.  .83,  90,  324 

Reserve    107 

Shareholders  of  insolvent  association,  election  and  duty 166 

Special,  to  examine  Bank  on  failure  to  redeem  notes 99 

To   receive   currency   to   send   by   registered   mail,    insured ;    form   of 

power  of  attorney 325 

Amendments — Articles  of  Association  to  extend  charter 72 

Comptroller  to  recommend  to  Congress  of  Bank  Act 5 

Provision  for,  of  articles,  in  by-laws 237 

Restriction  on  in  articles  of  association 29 

Annual  Meeting — (See  Meetings). 

Appeal — Right  of  shareholder  to  Comptroller  as  to  stock  value  on  withdrawal.     74 

Application — Designation  as  reserve  city,  form  of 322 

For  designation  as  Government  Depositary 265 

For  extension  of  charter 257 

To  Comptroller  of  Currency  for  title  of  association 205 

To  Comptroller  of  Currency  to  convert  State  Bank 226 

To  Comptroller  of  Currency  to  reorganize  State  Bank  as  Na- 
tional      223 

Appointment — Agent  of  association  to  examine  bonds  and  to  witness  destruc- 
tion of  circulation 83,  90 

Clerks  of  Comptroller's  OflBce 3 

Committee  to  examine  plates,  etc 87 

Comptroller  of  the  Currency 2 

Deputy  Comptroller   3 

Directors  of  Association 44 

Dissenting  shareholders.  Committee  of  appraisal  for 74 

Examiner  of  National  Banks 130 

Officers  of  Association 10.  242 

Receiver,  for  failure  to  pay  circulating  notes  or  on  forfeiture 

of  franchise    154,  156 

Receiver,   questioning  validity  of 156 

Special  Commission  for  preliminary  examination  of  associaton.      35 

Vacancies  in  Board  of  Directors 49 

Appraisal — Of  stock  for  holders  not  assenting  to  extension  of  charter 74 

Articles  or  Association — Amendment  for  extension  of  corporate  existence, 

and  form  of 72,  258 

Amendment  of  restricted 29 

Annual  meeting,  time  of  to  be  specified  in 44 

Converted  State  Bank,  execution  and  form  of.  .66,  229 

Copy  to  be  filed  with  Comptroller 8 

Creditors'  rights  not  to  be  impaired  by  change. . .      29 

Directors,  provision  for 46,  208.  210 

Form  of  may  be  varied 209 

Increase  of  capital  not  necessary  to  provide  for 
in 36,  213 

35X 


352 

PAGE 

Aeticlbs  or   Association — May   contain   special   provision   not   inconsistent 

with   law    8 

May  prescribe  method  of  transfer  of  stock 29 

Provision  for  lien  on  stock  invalid 213 

Provision    for    shareholder's    pre-emption    to    in- 
creased stock  not  necessary 38 

Specifications,  execution  and  form  of 

8,  207,  208,  209,  210 

Assessment — Aggregate  on  stock  not  exceed  total  liability 63 

Association  not  liable  for,  on  stock  of  another  association  held 

as  investment  though  illegal 17 

Capital  stock  unpaid  or  impaired,  enforcement  of 125 

Comptroller  may  levy  successive  on  stock 63 

Comptroller  to  enforce  on  stock  of  insolvent  association 61 

Comptroller  to  levy  on  association  for  Examiner's  fee 130 

Estate  of  deceased  shareholder  liable  to 53 

Executor,  trustee,  etc.,  not  personally  liable  for  stock  of  record 

as  such    64 

Expense  of  transportation  and  assorting  circulation  redeemed . .  101 

On  shares  bears  interest  from  date  of  order 53 

Plates,  for  engraving 101 

Purchaser  of  stock  by  contract  liable  to 56 

Semi-annual  duty  if  returns  not  made 134 

Shareholder's  personal  liability  and  limitations 52,  54 

State   tax 138 

Stock  not  registered  held  by  trustee 55 

Assessors — Shareholders'  list  accessible  to 127 

Assets. — Association  liquidating  to  consolidate  with  another 152,  255 

Association  in  liquidation  or  reorganizing,  disposition  of 251,  264 

Association  succeeding  State  Bank  and  statement  to  Comptroller...  35 

Balance  after  payment  of  creditors,  distribution  of 166 

Charged  off  in  reduction  of  stock 41 

Comptroller's  annual  report  to  contain  of  associations 5 

Converted  State  Banks,  what  take  over 68,  226 

Directors'  personal  liability  is  of  association 170 

Disposition  of  in  reduction  of  capital  impaired 42 

Exchange  of  property  by  receiver,  when  not  allowed 157 

Failed  Banks,  when  agent  of  shareholders  may  manage 166 

Insolvent  Association,  distribution  of 162,  166 

No  withdrawal  when  capital  reduced  to  meet  Impairment 41 

Of  liquidating  State  Banks,  reorganizing  as  National 225 

Policy  to  have  readily  convertible 28 

Receivership,  expenses  paid  from 165 

Receiver  to  sell  of  insolvent  association,  but  only  on  order  of  court. .  157 

Report  of  condition  to  Comptroller  to  contain .127 

Sale  of  to  redeem  circulation,  when  required 101 

"U.  S.  prior  lien  on  to  redeem  circulation 100 

Assignment — (See  also  Transfer  of  Shares). 

Executed  by  Comptroller  to  be  evidence  In  suit 197 

Judgment  by  association  without  collecting  void 21 

Of  assets  on  contemplation  of  insolvency  void 171 

Shareholder  of  property  after  association  insolvent 54 

U.  S.  Bonds  of  extended  asosciation  not  necessary 261 

U.  S.  Bonds,  called  for  redemption 346 

U.  S.  Bonds,  registered  and  coupon 333 

IT.  S.  Bonds,  form  of  power  of  attorney  for 336 

IT.  S.  Bonds,  form  of  resolution  for 336 

IT.  S.  Bonds  to  association  on  retiring  circulation 98 

IT.  S.  Bonds  to  IT.  S.  Treasurer  in  trust  for  association. .  .81,  82,  333 

Assistant  Cashier — Not  authorized  to  sign  circulating  notes 87,  240 

Not  authorized  to  sign  report  of  condition 127 

Office  of  and  duties 240 

Attachment — Against  association  prohibition  when  and  when  not  apply 195 

Attorney — Balance  proceeds  bonds  to  redeem  circulation  may  be  paid  to 98 

Corporator  may  act  by 202 

For  preparation  of  organization  papers 222 

Legal  of  association  and  power  of 20,  242 

Of  person,  unlawful  interest  charged  may  recover 101 

Of  Receiver,  may  be  dismissed  at  pleasure 160 

Auction — Bonds  of  association  on  failure  to  redeem  circulation 98,  100 

Enforcement  of  assessment,  impaired  capital 125 

Real  Estate  of  association  by  Receiver 165 

Sale  of  delinquent  stock 33 

Shareholder's  stock  dissenting  from  extension "4 

Authority  op  Associations — (See  Corporate  Powers), 


353 


PAGE 

Bad  Debts — Stock  not  entitled  to  proceeds  on  collateral  of,  charged  off  after 

surrender    41 

What  constitutes    124 

Bank  Examiners — (See  Examiners). 

Banking  Business — (See  also  Organization,  Corporate  Powers  and  Liquidation). 

Authorization  of  association  to  begin 32,  34 

Place    of 104 

Provision  for  regulation  of  in  by-laws 235 

State  Bank  reorganizing  as  National  not  interrupt 225 

What  constitutes  and  management  of 9,  238 

Gankinq  House — Association  may  own  real  estate  for 24 

Excessive  investment  only  Comptroller  can  take  exception. .  25 

Investment  should  be  in  proportion  to  capital  and  business. .  25 

Insolvency — Liability   for   lease 156 

May  improve  to  yield  income 25 

Organizers  not  authorized  to  lease  or  purchase  until  asso- 
ciation chartered 217 

Place  of  business,  defined 104 

Banking  Powers — (See  Corporate  Powers). 

Bank  Note  Paper — (See  Crimes). 

Bank  Officers — (See  Officers  of  Association). 

Bankrupt  Law^ — No  application  to  insolvent  association 156 

Bills  of  Exchange — Discount  of  when  not  greater  rate  of  interest 109 

Illegal  transfer  of  void 171 

Not  limit  individual  or  bank  Indebtedness 118,  122 

Penalty  for  official  malefeasance  relative  to 177 

Transfer  of  to  create  a  preference  void 171 

Bills  Receivable — Re-discounting 16 

Renewals  of  original  notes  latter  not  evidence  of  debt. . . .  173 
Board  op  Directors — (See  also  Directors). 

Action  necessary  to  guarantee  special  deposits 10 

Action  required  in  extension  of  corporate  existence 72 

Advantage  of  sliding  scale 46,  210 

Annual  meeting  not  calling 50 

Appointment  of  judges  of  election,  provision  for  in  by- 
laws      233 

Appointment  or  election,  officers  of  association 11 

Approval  of  transfer  of  stock  not  necessary 31 

Articles  of  Association,  providing  for  quorum 46 

Association  to  elect  or  appoint 44,  45 

Assuming  liabilities  of  State  Bank  in  reorganizing 223 

Authorized    acts 10 

Authorization  by,  for  designation  as  reserve  city 108 

Authorization  to  fix  price  of  increased  capital 39 

Bonding    officers 48 

Bond  transfer  form  of  resolution  in  change  of  title 322 

Can  act  only  as  a  Board 46 

Cannot  vote  increase  of  capital 37 

Capital  impaired,  duty  of 33 

Certificate  to  Comptroller  to  secure  charter 35 

Certifying  report  of  condition  to  Comptroller 127 

Collectively  not  individually  agent  of  corporation 46 

Determine  as  to  safe  deposit  vaults 12 

Dividends,  when  may  declare 117 

Duty  of  to  preserve  assets  when  Examiner  in  charge. . .  161 
Election  of  when  not  provided  for  in  articles  of  asso- 
ciation      50 

Election  of  and  provision  for  when  regular  meeting  not 

held 42,   44,   49,  211 

Elected  annually 44 

Form    of   resolution,    withdrawal    or   transfer    of   bonds 

from    Treasurer 323,  322 

Guaranteeing   paper  of   association 18 

Liability   for  damage   to   shareholders   for  violation   of 

Bank    Act 169 

Liquidating  association,  continuation  of 153,  251 

May  refuse  registration  of  transfer  of  stock 31 

May  appoint  liquidating  committee 153 

Minimum   number   of 44 

Must  authorize  borrowing  money 15 

Not  authorize  loaning  for  customers 20 

Not  authorized  ex-officio  to  capitalize  surplus 37 


354 

PAGE 

BOARD  OF  DiEECTOKS — Not  authorized  to  act   as   shareholders   unless   holding 

entire  stock    43 

Number  elected  constitute  Board  for  year 47 

Oversight  of  association  and  responsibility 47,  238 

Power  to  remove  President 51 

Prescribe  reasonable  regulations  transfer  of  stock 31 

President  of  Board  to  be  elected  from 50 

President,   power  of 50,  51 

Provision  for  and  shareholders'  control  of 44^  50 

Provisions  in  by-laws  for  meetings  of 233,  235 

Quorum,  what  constitutes .'     45 

Real   Estate  conveyance ..'.'.      24 

Resident  in  State,  number  required '.      44 

Shareholders  not  for  extension  of  charter  to  notify  in 

writing    74 

Shareholders  may  require  to  declare  dividends  when.  .  .  .    118 
Shareholders  to  authorize  assessment  stock  for  impair- 
ment  capital 125 

State  Bank  converting  to  National 66,  67,  68,  227 

To  authorize  purchase  of  real  estate 24 

To  give  notice  of  association  closing 152 

To  sell  stock  of  shareholder  refusing  to  pay  assessment.    125 

Vancancies,  to  fill 47,  49 

Withdrawal  of  bonds  from  Treasurer,  to  authorize 82 

Body  Cobpokate — (See  also  Corporate  Powers). 

When   association   becomes 9,  34,  217 

Bonds,  Miscellaneous — Dealing  in 13 

Railroad,  ultra  vires  for  purchase  may  not  set  up. . .      23 

Bonds,  Official — Comptroller  of  Currency 2 

Deputy   Comptroller 3 

Directors  not  expire  when  corporate  existence  extended....      72 

Indemnity  for  lost  stock  certificate 31 

Officers  of  association 10,  48,  242 

Bonds,  U.  S. —  (See  also  Interest  and  Penalty). 

Annual  examination  of  required 83 

Associations    dealing    in 13 

Assignment  and  transfer  of 81,  82,  333 

Called  for  redemption 346 

Circulating  notes  to  read  secured  by 86 

Comptroller  access  to  records  of  and  deposit  with  U.  S.  Treasurer     83 

Converted  State  Bank  to  deposit 67 

Coupon  Bonds  exchanged  for  registered 80 

Coupons  detached  of  called  bonds 346 

Coupons    lost 343 

Deficiency  in,  proceeds  from  sale,  what  first  lien 101,  174 

Defined     78,  185 

Deposit  of  required  to  begin  business 79,  219 

Deposit  to  secure  circulation 79,  80,  85 

Depreciation,  security  for  circulation,  how  made  good 85 

Duplicate  for  lost 343 

Exempt  from  State  and  local  taxation 148 

Extended  Banks,  no  transfer  necessary 261 

General  provisions  respecting 84,  333 

Government  depositary,  deposit  required  to  become 66 

Insolvent  association  to  be  sold  by  Comptroller 100 

Interest-bearing     347 

Interest  payment,  time  of 339 

Liability  of  association  for  failure  in  contract  of 11,  22 

Matured    347 

May  withdraw  from  Treasurer  by  lawful  money  deposit 96 

Reassignment  of  to  Association 98 

Records  of  assignment  and  transfer  kept  by  Comptroller 82 

Registered,  deposited  with  U.  S.  Treasurer 79 

Sale  of  for  failure  to  deposit  lawful  money  to  retire  circula- 
tion     98,   100,   101 

Security  for  circulation,  exchange  of  and  payment  of  interest 

on 84.   86 

Transfer  books,  when  closed 339,  340 

Transfer  of,  how  credited 82 

Treasurer  of  U.  S.  access  to  records  of  Comptroller  relative  to. .     83 

Treasurer  of  U.  S.  to  hold  in  trust  for  association 82 

Withdrawal  of  and  of  circulation 80,  95,  333 

Withdrawal,  form  of  Board  resolution 323 

Withdrawal  of  for  exchange 8* 


355 

PAGE 

Bookkeeper — Position  of  and  duties 241 

Books  of  Association — Evidence  in  suit 63 

Recourse    to 63 

Shareholders,  how  enforce  right  to  Inspect 151 

Borrowed  Money — (See  Liabilities). 

Branch  Banks — Allowed  for  World's  Fair 76,  105 

Association  may  not  have 9,  105 

Branch  office  in  another  State  not  taxable 146 

Concerning    105 

Converted  State  Bank  may  retain 69 

Broker — Association  not  act  as  for  commission 20 

Bureau  of  the  Currency — (See  Comptroller  of  the  Currency  Ofllce). 
Business  Paper — (See  Commercial  Paper). 

By-Laws — Board  of  Directors  to  malie 10 

Directors  may  fix  date  annual  meeting  in 50 

May  prescribe  method  transfer,  of  bonds 29 

Provision  for,  scope,  and  form  of 10,  232 

c 

Capital  Stock — (See  also  Shares,  Shareholders,  Taxation). 

Assessment  of  as  personal  property  void  if  shareholders  not 

mentioned    139 

Association,  how  shares  taxable  by  State 138 

Authorization  of  less  than  $100,000 29 

Branches  of  Converted  State  Bank,  division  of  capital 69 

Certificate  of  payment  to  Comptroller 32,  34,  219 

Certificate  of  increase,  form  of 320 

Character  of   243 

Change  of  location,  capital  must  correspond  to  population. ...  71 

Circulation  not  to  be  used  to  create 122 

Circulation  not  to  exceed  amount  paid  in 86 

Comptroller  of  Currency  approval  of  increase  required 37 

Deposit  of  U.  S.  Bonds  based  on 79 

Division  of  into  shares,  number,  value 29 

Dividends  on  when  prohibited 123 

Employment  of  by  association 140 

Fees  of  examiners,  based  on 130 

Form  of  resolution  to  increase 319 

Impairment,  form  of  notice  to  shareholders 323 

Impairment  of,  provision  against 124 

Increase,  provision  for  and  when  effective 36,   37,  235 

In  reduction,  liability  of  shareholders  and  directors  principal 

consideration    41 

Installment  payment,  and  certification  of 32 

Increase  of  in  consolidating  associations 152,  255 

Increavse  not  necessary  to  provide  for  in  articles 213 

Increase  of,  when  taxable 139 

Limitation  on  withdrawal  of  bonds 84 

Limit  of  indebtedness,  proportion  to 122 

Limit  of  time  for  payment 33 

Loans  not  to  exceed 122 

Loans  to  individuals  restricted  to  10  per  cent,  of 118 

May  be  subscribed  by  a  few  and  distributed 204 

Negotiability  U.  S.  Laws  govern  not  State 152 

Net  profits,  proportion  to  required  as  surplus  fund 117 

Organization   Certificate   to   contain   number   and   amount   of 

shares    9 

Payment  on,  required  to  begin  business 32,  217 

Procedure  to  restore  Impaired 33,  125 

Procedure   to   increase 37 

Record  of  subscriptions  to 218 

Reduction,  procedure  and  when  take  effect 40 

Reduction  of  cannot  be  below  outstanding  circulation 40 

Reduction  where  capital  $100,000  and  population  not  require.  40 
Reduction    to    meet    impairment,    withdrawal    of    assets    pro- 
hibited      41 

Reduction  of  on  Impairment  and  form  of  resolution 124,  320 

Reduction  of,  disposition  of  assets 42 

Released  by  reduction  absolute  property  of  Individual  share- 
holders      41 

Required   as   association 28,  204 

Shares,  distinguished  from 139 

Shareholders  must  authorize  increase 37 

Shareholders'  preference  in  extended  association 74 


356 

PAGE 

Capital.  Stock — Shareholders,  relation  to  charged  off  assets,  in  reduction  of 

capital    41 

Should  keep  unimpaired 243 

State  Bank  stock  vote  required  for  conversion 66 

State  Bank,  converting  amount  required 67,  226 

State  or  Private  Bank  reorganization,  payment  of 223 

Subscription  to,  when  payable 34 

Surplus  above  20  per  cent,  may  be  used  for 37 

Taxation  of  (See  Taxation). 

Time  for  payment  befoie  Receiver  appointed 34 

Total  of  association.  Comptroller  to  report  to  Congress 6 

Vote  of  required  for  voluntary  liquidation 150 

When  increase  becomes  valid 38 

Withdrawal  of,  when  prohibited 124 

Cabhisb — (See  also  Officers  of  Association). 

Action  in  extension  of  corporate  existence 72,  260 

Action  to  prevent  protest  of  circulating  notes 98 

Appointed  by  Board  of  Directors 10 

Association  not  bound  by  promise  of,  to  pay  unlawful  interest Ill 

Binds  Bank  in  making  collections 20 

Bonds  of  when  binding 22 

Borrowing  money  limited  in 15 

Cannot  guarantee  special  deposits 11 

Cannot  bind  association  by  guarantee  of  mortgage  bond 19 

Certificate  to  Comptroller  of  payment  of  capital 32 

Directors,  when  and  when  not  liable  for  mismanagement  of 48 

Dividends  declared  and  net  earnings,  to  certify  Comptroller 128 

Failure  to  record  transfer  of  stock 56 

Fraud  of,  not  relieve  association  as  endorser 17 

Habitual  action  binds  Bank  for  special  deposits 11 

Holds  office  at  pleasure  of  Board  of  Directors 22 

Liquidation  on  expiration  of  charter  to  certify  Comptroller 252 

List  of  shareholders  required  to  keep 127 

May  act  for  Board  to  purchase  real  estate 24 

May  be  examined  by  Examiner 130 

Must  be  authorized  to  borrow  money 16 

Oath  on  tax  return  for  circulation 134 

Office  of.  and  duties 239 

Provision  in  by-laws  for  appointment  and  duties 234 

Re-discount  association  liable  for  action  of 16 

Report  of  condition  to  certify  Comptroller 127 

Signature   attest  circulating   notes 87,  88 

Transfer  of  U.  S.  Bonds  of  association 81 

Central  Reserve  Cities — Comptroller  of  Currency  may  designate 108 

Privilege    of 108 

Requirement  to  become 108 

CebtD'ICATB — Comptroller,  authority  to  begin  business 34,  35,  220 

Capital  paid  in  by  State  Bank  converting 230 

Clearing  house,  counted  as  lawful  money  reserve 107 

Comptroller  charter  of  converted  State  Bank 67 

Comptroller  for  change  of  name  and  location 70,  71 

Deposit  of  public  moneys 269 

Directors  of  reorganized   State   Bank  not   take   over  prohibited 

assets    35,  224 

Directors  to  Comptroller  vote  for  liquidating 152 

Evidence  of  transfer  and  legal  holder  of  stock 56 

Extension  of  corporate  existence  to  Comptroller,  and  form  of. 72,  258 

Increase  of  capital  stock,  form  of 36,  37,  38,  320 

Instruments  of  Comptroller  as  evidence  in  court 197,  198 

New  of  stock.  State  Bank  converting  not  necessary 69,  221 

Officers  and  Directors,  payment  on  capital 35,  219 

Organization,  contents  and  execution  of 8,  9,  215 

Payment  of  installments  of  capital 32,  34,  219 

Publication  of  authority  to  begin  business 36 

Reduction  of  capital  stock,  and  form  of 40,  320 

State  Bank  converting  to  National 66 

Stock,    care   of 244 

Stock,  issue  of,  liability  on o5 

Temporary  of  stock  and  form 205 

Chabter — (See  also  Corporate  Existence). 

Date  of  expiration  of •  ^»  257 

Extension   of "2,  257 

Extension  of,  action  of  shareholders  required 258 

Extension  of,  application  to  Comptroller 257 

Extension  of,  certificate  of  officers  to  Comptroller i  260 


tAQt 

Charter — Issue  of  Comptroller's  certificate  constitutes 35,  220 

Number  of  association  to  be  on  circulating  notes 87 

Chattels — As  security  for  loans 13 

Checks — Association  may  deal   in 19 

Certified  when  uncovered  by  deposits 126 

Illegal  certification  of  and  penalty  for 184,  185 

CiBCULATiNQ  NOTES — Agent  of  association  to  witness  destruction  of  mutilated     90 

Association  may  issue 10 

Association  may  increase  at  any  time 86 

Association  to  retire,  if  reduction  of  capital  require 79 

Association   to    receive   amount   equal    to    face   value   of 

bonds   deposited 85 

Association  prohibited  issuing  post  notes  as  money 89 

Association  to  redeem  at  counter  at  par 92 

Associations  exempt  from  10  per  cent,  tax  on 138 

Association  to  reimburse  Treasurer  for  redeemed 92 

Association  to  pay  expense  of  redemption 101 

Association  not  pledge  or  hypothecate 123 

Association    liable    for,    though    unsigned    or    signature 

forged    89 

Association  cease  business  on  failure  to  pay 100 

Bonds  U.  S.,  how  held  to  secure 81 

Buying,  selling,  etc.,  Counterfeits  of,  penalty  for....  187,  188 

Certificate  of  destruction  of  retired 102 

Charter  number  to  be  printed  on 87 

Comptroller  to  assess  tax  if  returns  not  made 135 

Comptroller  to  have  plates   and   dies  engraved  for   and 

print    from 86 

Corporate  existence  extended 261 

Countersigning  unlawfully  by  Government  oflBlcers,  pen- 
alty   for 176 

Counterfeit,   Government  officers  and  National   Bank  to 

stamp  as  such 129 

Default  In  payment  of,  how  redeemed 100 

Denominations   of 85,  86 

Deposit  of  lawful  money  to  retire 248 

Destruction  of  liquidating  association  after  redemption.  .      98 
Disposition  of  notes  redeemed  and  issue  of  new.  .92,  313,  314 

Disposition  of  redeemed  under  Act  of  1864 102 

Expense  for  printing  to  be  paid  by  tax  on 87 

Express  charges  under  Government  contract      330 

Extended  Banks,  requirement  to  retire  old 96 

Failure  to  redeem  Comptroller  to  examine  association. . .      99 
Form  of  power  of  attorney  to  agent  to  send  by  registered 

mail   insured 325 

Forging  or  counterfeiting,  penalty  for 185 

Genuine  stamped  as  counterfeit  to  be  redeemed 129 

Government  Depositaries  to  receive  at  par 66 

Interest  on  bond  security  when  withheld 85 

Issue  of,  signing  and  denominations 220,  221 

Lawful  money  deposit  to  redeem,  question  of  extent  of 

obligation    99 

Lawful  money  reserve  required  on  abolished 106 

Ledger   account   of 311 

Legal  tender,  how  far 88,  108 

Limit  of  gold  banks  issue  repealed 88 

Limit  of  one-third  in  $5  notes 86,  222 

Liquidating    association,    time    limit    to    deposit    lawful 

money  to  retire  and  penalty 98 

May  be  Increased  on  deposit  of  bonds 86,  96 

May  equal  amount  of  capital  paid  in 86 

National  Currency,  statute  to  provide  for 1 

National  Gold  Banks  provisions  for 90,  91 

Negotiable    when 88 

Not  taxable  when  lawful  money  deposited  to  redeem ....    136 
Not  presented  for  redemption  benefit  to  inure  to  Treasury     97 

Not  counted  In  limit  of  Indebtedness 122 

Notes  less  than  $5  prohibited 87 

Notes  of  city,  etc.,  tax  on 136 

Of  Associations  Comptroller  to  report  to  Congress 4 

Of  closed  Banks,  penalty  for  issuing 188,  189 

Of  failed  associations,  how  paid 100 

Ordering  before  time  for  beginning  business 264 

Penalty  for  engraving  or  using  false  plates 186 

Penalty  for  imitating  or  mutilating 91,  92 


35S 

l>AGE 

CiBCULATiNG  NoTES — Plates,  dies,  etc.,  of  to  be  examined  annually  by  Comp- 
troller      87 

Printed  signatures  suflScient 89 

Private  sale  of  bonds  of  failed  association  to  redeem,  . . .  101 

Prohibition  of  pledge  of,  reason  for 123 

Proportion  of  to  capital 79 

Protest  on  failure  to  redeem  on  demand 98 

Provision  for  security  on  depreciation  of  value  of  bonds.  85 

Provision  for  face  of  note 86 

Provision  for  destroying  mutilated  and  replacing 90 

Reassignment  of  bonds  on  retiring 98 

Redeemable  in  lawful  money 108 

Redeemed  and  fit  for  circulation  returned  to  Bank.  93,  102,  313 
Redeemed   disposition   of.   Secretary  of   Treasury   to   de- 
termine and  perpetuate  evidence  of 102 

Redeemed,  remittance  for 310 

Redemption  fund  of  5  per  cent,  to  be  maintained.  . .  .92,  309 

Redemption  regulations 93 

Reduced  when  bonds  withdrawn 84 

Reduction  on  depreciation  of  bond  security 85 

Repeal  of  limit  on  aggregate  amount 88 

Retirement  of,  of  liquidating  association  to  consolidate..  152 

Retiring  on  expiration  of  charter 75 

Signing   of 222 

State  Bank  issue,  association  liable  for  after  conversion.  68 

State  Bank  tax  on 136 

Taking  impression  of  plates,  penalty  for 187 

Tax  on,  how  collected  when  Bank  fails  to  pay 135 

Tax  on  provision  for  and  regulations 133,  134,  315 

Tax  on  secured  by  2  per  cent,  bonds 134 

Tax  paid  in  excess,  how  secure  refund 135 

Taxable  under  State  laws  as  money 146,  148 

Territories  cannot  charter  Bank  of  issue 76 

Time  required  for  preparing 222 

Transportation   and   assorting   for   redemption,   expense, 

how   paid 101 

Transportation  by  registered  mail  Insured 332 

Unauthorized  possession  of  plates,  penalty  for 188 

Uncurrent  notes,  association  not  to  pay  out 126 

U.  'S.  notes  and  coin,  issue  of 326 

U.  S.  Treasurer  to  redeem  on  lawful  money  deposit. . .  .95,  98 

Use  of  printed  or  engraved  signatures 89 

When  exempt  from  taxation 136 

"Withdrawal  by  Association 96 

Worn  and  mutilated  destroyed  to  be  replaced  by  Comp- 
troller      93 

Worn  and  mutilated  to  be  destroyed  by  maceration 103 

Claims — (See  Insolvency;  Receiver). 

Cleabiko  House — Association  may  be  member  of 22 

Certificates  of,  counted  as  reserve 107 

Clebks — Appointment  for  Comptroller  of  Currency  Office 3 

Names  and  compensation  of  Comptroller  Clerks  in  annual  report 6 

Not  act  as  proxy  for  shareholder 43 

Prohibited  certifying  checks  not  covered  by  deposits 126 

Provision  in  by-laws  for 233 

Qualifications   of 241 

Coin — Issue  of  United  States 327 

Redemption   of 329 

Collateral.  Security — Loans  secured  by,  Included  in  individual  liability 119 

Secured  creditor  of  insolvent  association 163 

Shares  registered  held  as 39,  54,  68 

Stocks    and    mortgages 13,  26 

Ultra  Vires,  for  purchase,  borrower  on,  not  set  up ... .  23 

Collections — (See  Corporate  Powers). 

Collections  Clerk — Position  of  and  duties 241 

Collector  of  Taxes — Vested  with  visitorial  powers 131 

Columbian  Exposition — Provision  for  Branch  Association  in 76 

Commercial  Papeb — Association  exceeding  authority  In  purchase  of,  not  re- 
lease maker  or  endorser 22 

Discount  of  not  limit  individual  borrowing 118 

Guaranteeing  payment  of 18,  19 

Purchase  by  Association 14 

Compensation — Clerks  of  Comptroller  of  the  Currency 6 

Comptroller  of  the  Currency 3 


359 

1>AGE 

Compensation — Deputy  Comptroller    3 

Examiners  of  Association 130 

Compounding  Debts — Authority  necessary  when  association  insolvent 158 

CoMPTBOLLEB  OP  THE  CuBKENCY — Access  to  U.  S.  Treasurer's  books  and  bonds 

held  for  Associations 83 

Action  of  on  proof  association  failing  to  re- 
deem notes 99 

Annual  report  to  Congress 4,  5,  6 

Appointment,  duties,  etc 2 

Authorize  association  to  begin  business 34 

Authorize  conversion  of  State  Bank 67 

Bonds  of  association  authorized  to  sell  on 
failure  to  make  deposit  to  retire  circula- 
tion    98,  101 

Bureau,  clerical  force,  etc 2,  3 

Capital  stock  impairment  action  required. .  125 
Capital    stock    increase    of    to    be    approved 

by    36,  37,  38 

Capital  stock  reduction  to  be  approved  by. .      40 

Certificate  to  begin  business 35 

Circulation,  duties  as  to.  on  depreciation  of 

bond  security 84 

Circulating     notes     to     furnish     association 

equal  to  par  value  of  bond  deposit 85 

Creditors  of  insolvent  association  to  notify. .    154 

Decision  final  for  assessment  of  shares 61 

Deputy  Comptroller  acting  as 3 

Designation   of   reserve   and   central   reserve 

cities    107,  108 

Directors,  to  bring  suit  against  for  violation 

of  Bank  Act 169 

Enforce   shareholders'    liability 61 

Engraving  plates  and  printing  circulation  to 

provide  for 86 

Examiners  of  associations,  to  appoint 130 

Examination  of  association  on  failure  to  re- 
deem   circulation 99,  100 

Ex-officio  Commissioner  of  Preedmen's  Sav- 
ings   Bank 2 

Extension  of  corporate  existence  to  au- 
thorize     72,  73 

Insolvent  association  dividends  to  distribute.  162 
Insolvent  associations,  to  call  shareholders' 

meeting    166 

Instruments  certified  by  as  evidence  in  suit.  197 
May  levy  successive  assessments  on  shares. .  63 
Penalty   for  failure  of   association   to  make 

report     129 

Place  of  business,  ruling  as  to 105 

Plates  and  dies  of  circulation,  when  useless 

to  destroy 87 

Plates  and  dies  for  circulating  notes,  charged 

with  safe  keeping  of 87 

Plates  and  dies,  etc..  of  circulating  notes,  to 

make  annual  examination  of 87 

Prohibited    interest    in    association    issuing 

currency    3 

Purchase  of  real  estate  may  authorize  with 
approval  of  Secretary  of  Treasury  to  pro- 
tect   equities 165 

Receiver,  may  appoint  though  association  in 

liquidation    161 

Receiver,  may  appoint  on  evidence  of  insol- 
vency       154 

Receiver,  may  remove  at  pleasure 156 

Receiver,  to  appoint  where  reserve  short  not 

made   good 106 

Receiver  under  direction  of 156 

Report  of  condition  of  association  prescribed 

by    127,  128 

Reserve  of  association  when  short,  to  notify 

to  make  good 106 

Reserves  title  for  applicants  organizing  as- 
sociation        207 

Shareholders  against  extension  of  charter 
may  appeal  to,  for  appraisal  of  stock ....      74 


^60 

.  tAGE 

CoMPTROLLEK  OP  THE  CURRENCY — Shareholders'  agent  of  insolvent  association 

action  as  to 167 

Security  offered,  to  approve  on  depreciation 

of  bond  deposit 85 

Title  and  location  change  of,  to  approve. .  .70,  71 

To  approve  title  of  association 8,  205 

To  malte  assignment  and  give  receipt  for  U. 

S.  bonds  deposited  by  association 81 

To  provide  for  destruction  of  mutilated  notes 

and   re-issue 90 

Transfer  of  bonds  for  deposit  with  Treasurer, 

to  keep  record  of 82 

Transfer   of   bonds   withdrawn   from    Treas- 
urer, to  advise  Bank  of 82 

Treasurer  to  receipt  to  for  deposit  to  retire 

circulation    97 

Visitorial  powers  vested  with 131 

Comptroller  op  the  Currency  Office — Clerks 3 

Expense  of  to  be  paid  from  tax  on 

circulating    notes 87 

Title  of  Bureau  and  object 2 

Consolidation — ^Allotment  of  stock 255 

Assumption  of  liabilities  of  liquidating  association 255 

Authorization  of  and  procedure 253 

Forms    for 254 

Increase  of  capital  for 255 

Liquidation  of  association  for 152,  253 

Liquidation  of  two  or  more  Banks  for 256 

Payment  for  stock  in  new  association 255 

Purchase  of  assets  of  liquidating  association 255 

Rights  of  shareholders  of  liquidating  association 254 

Contracts — Association  making  beyond  its  power,  void 22 

Association  may  make 10,  11 

Association  not  make  to  aid  other  business  to  advance  its  own. . .  21 

Association  not  plead  ultra  vires,  when  receive  benefit  of 23 

Association  purchase  of  bonds  agreeing  to  replace 22 

Liquidating  association  not  make 151 

Provision  in  by-laws  for  execution  of 237 

Subscribers  to  stock  when  few  subscribe  first  for  entire  amount.  .  34 

Subscription  to  stock,  what  involve 33 

To  pay  liabilities  of  another  Bank 19 

To  sell  stock  to  give  control  of  association 32 

Usurious  interest  not  render  void 115 

Converted  State  Banks — (See  State  Banks  Converted). 

Corporate  Existence — Association  in  liquidation  still  sue  and  be  sued 151 

Certificate  of  officers  to  Comptroller  for  extension ....  260 

Date  of  expiration  of  charter 9,  267 

Examination  required  for  extension 73 

Extended  association  circulating  notes  of 261 

Extended    association    bond   deposit   transfer   only   re- 
quired      261 

Extended  association,  old  circulation  to  be  retired.  ...  96 
Extended  assciation  rights  and  liabilities  same  as  be- 
fore     73,  257 

Extended   association   form   of   amendment  to   articles 

and  certificate  to  Comptroller 72,  258,  260 

Extended  association,  form  of  proxy  for  shareholders.  259 

Extended,  only  if  association  in  satisfactory  condition  73 

Extended  association,  shareholders  dissenting  from .  . .  262 

Extended  association,  special  examination  required...  73 
Extended  association,  provision  for  and  procedure 

71,  72,  257 

Extended  association,  shareholders'  action  required  72,  259 

Extension  to   liquidate 74,  253 

Liquidation  on  expiration  of 251 

Reorganization   when   preferable 263 

Shareholders'  action  not  necessary  to  close  association  251 

Shares  in  estate,  how  voted  for  extension 260 

Corporate  Powers — Board  of  Directors,  may  elect 10 

Board  of  Directors  to  adopt  by-laws 10 

Capital  may  increase 36 

Capital  stock,  reduction  of 40 

Clearing  house  membership 22 

Commercial  paper,  dealing  in 14 

Contracts,  what  legitimate  for  association 11 

Dealing  in  checks 19 


361 

PAGB 

COKPOKATE  PowEHS — Dealing  In  U.  S.  Bonds 13 

Deposits   as   stakeholder 12 

Deposits,  association  may  contract  to  repay 11 

Deposits,  general  and  special 11 

Deposits,  municipal  funds  and  paying  interest  on 11 

Deposits,  special  may  receive  for  safe  keeping 11 

Directors  refuse  transfer  of  stock,  when  lawful 31 

Guarantee  of   Commercial   Paper 19 

Holding  mortgage  on  property 26 

Income  from  Banking  House  property 25 

Legal  attorney,  may  employ 20 

Liabilities  of  other  Bank  may  contract  to  pay 19 

Limitations   under  Territorial   laws 75 

Limited  until  chartered 10 

Loans    13 

Loans  to  officers 19 

May  have  succession  for  20  years 9 

May  remove  officers  of  association  at  pleasure 22 

May  sell  grain  on  credit  to  acquire  lien 20 

May  take  action  to  recover  stolen  property  of  depositors  11 

Mortgage  may  foreclose 26 

Municipal  bonds,  dealing  In 14 

Not  specified  not  necessarily  prohibited 10 

Principal    and    incidental 10 

Property  acquired  In  excess  of  debt 26 

Purchase  of  stock  of  other  associations  for  debt 17 

Real  estate  mortgage  to  endorser  to  inure  to  association.  26 

Real  estate  security  on  notes  renev^red 26 

Re-discounts    16 

Safe    deposit    boxes 12 

Savin  ^s    department    12 

Security    for    loans .  13 

Specified •..  10 

Stock  taken  for  debt 17 

To  sue  and  be  sued 10 

COBPORATB  Powers — Restrictions. 

Accommodation  paper,  Illegal 18 

Associations  may  not  loan  money  for  customers 20 

Forfeiture  of  charter  for  violation  of  Bank  Act 169 

Guarantee  of  Association  when  Illegal 18 

Lending   credit   of   association    illegal 18 

Liability  In  refusal  to  transfer  stock 31 

Not  bind  association   for  draft  depending  on  future  de- 
posits      20 

Not  engage  m  manufacturing  business 21 

Officers  not  authorized  to  donate  funds 21 

Partnership,  not  to  be  a  mem"ber  of 21 

Real  estate,  illegal  holding,  liability 27 

Real  estate  policy  of  law  in  restrictions  on 27 

Stocks  and  bonds,  not  dealing  In 13 

Stock  of  anoth.er  association  not  hold  as  investment 17 

Ultra  vires 22 

Corporation — Association  may  become  before  any  capital  paid 34 

When   association   becomes 9,  217 

Corporators  of  Association — Agent  or  attorney  may  act ;  form  of  power  of 

attorney     , 202 

Infant  cannot  be 202 

Married  women  as 202 

Minimum  number 8 

Must  be  natural  persons 8,  201 

Cost — (See  Expenses). 

Counterfeits — Genuine  notes  stamped  counterfeit  to  be  redeemed 130 

Penalty  for   185,  187,  188 

Regulations  regarding  counterfeit  notes 129,  332 

Coupons  of  U.  S.  Bonds — Detached  from  called  bonds  provision  for 346 

Lost     343 

Courts — (See  also  Jurisdiction). 

Creditors'  bill  In  equity  enforcing  shareholders'  liadility 154 

Decides  liability  on  stock  where  question  of  fact  involved 59 

Full  liability  of  shareholders  to  be  enforced  by 61 

Jurisdiction   of    159,  160,  182.  191 

May  appoint  Receiver  though  as.socIatlon  In  liquidation 151 

May  enjoin  Comptroller  and  Receiver 164 

May  review  Comptroller  of  Currency  construction  of  Bank  Act 2 

Procedure  In  liability  of  shareholders  similar  to  all  procedures 61 

Protest  of  circulating  notes  when  restrained  by 99" 

25 


362 

PACK 

Courts — Shareholders  may  ask  to  interpose  for  declaration  of  dividends 118 

Suit  to  enforce  liability  on  stock  in  voluntary  liquidation 64 

Vested  with  visitorial  powers  to  association 131 

Creditobs — Association  required  to  notify  of  purpose  to  go  Into  liquidation.  .  .    153 

Bill  in  equity  against  shareholders 154 

Cannot  bring  action  against  Director  personally  for  violation  of 

Bank  Act   170 

Checks  falsely  certified  valid  against  Association 126 

Circulating  notes  of  failed  association  to  be  paid  at  Treasury.  .  .  .    100 
Depositor  in  insolvent  association  to  recover  must  trace  funds  to 

Receiver    173 

Directors'    liability 169 

Forfeiture  of  right  to  interest  on  claims  of  insolvent  associations.    163 
How  establish  claim  against  insolvent  association,   and   right   of 

appeal    162 

Insolvency  of  association  not  relieve  shareholders'  liability 59 

May  bring  suit  against  Receiver  or  association 159 

May  sue  Association  on  claim  rejected  by  Receiver 164 

No  right  to  proceeds  of  fraudulent  sale  of  stock 61 

Not  preferred,  on  demand  growing  out  of  fraud  by  officers  antici- 
pating   insolvency 173 

Notice  of  liquidation 247,  252 

Of  Depositor,  right  to  garnishee  association  in  liquidation 152 

Of  insolvent  association,  what  interest  entitled  to 162 

Of  State  Association  settlement  with  in  reorganizing 223 

Procedure  when  association  becomes  insolvent 61 

Record  of  shareholdings,  may  inspect r 127 

Rights  not  to  be  impaired 29,  60 

Secured  of  insolvent  a.ssociation,  what  rights <      163 

Shareholders'   agent,   settlement  with 166 

Shareholders  assigning  stock  to  avoid  liability 64 

Shareholders  having  claim  cannot  set  off  against  assessment....      62 

Suit  against  directors,  whether  in  equity  or  at  law 171 

What  constitutes  a  preference  anticipating  insolvency,   and  what 

not    172 

When  receive  dividends  on  assets  of  insolvent  association 162 

When  settled  with,  by  association,  claim  against  shareholders  de- 
barred       151 

Cbimeb — (See  also  Courts,  Jurisdiction,  Penalty). 

Association  receiving  public  moneys  unless  depositary 189 

Bank  note  distinctive  paper,  illegal  possession  of 187 

Counterfeiting   circulation    186 

Improper  countersigning  or  delivering  circulation 176 

Issuing  circulation  of  expired  association 188,  189 

Material  for  circulation,  illegal  possession  or  use  of 187 

Official   malefeasance    177 

Pledging  U.  S.  notes  or  Bank  circulation 177 

Unauthorized  impressions  of  tools,  having  or  taking 188 

CUMTTiiATrVE  VOTING — Prohibited  Associations 43 

CUBBBNCY  BuBBAU — (See  Comptroller  of  the  Currency  Office). 

D 

Debentubes — Of  Mortgage  Loan  Company  as  collateral. 26 

Debt — Authority  necessary  for  compounding  debts  of  insolvent  association 158 

Payor  of  usurious  interest  may  recover  in  action  of Ill 

Real  estate  taken  for  and  held  for 24,  ^5 

Stock  may  be  taken  for ^  • 

Deceased  Shareholders — (See  Shareholders). 

Definitions — Bad    debts •  •   ^^^ 

Banking  powers iii 

Greater  rate f\ 

Legal  tender  and  lawful  money ^4 

Moneyed    capital %q 

National   Banks    ^8 

Obligations  of  the  U.  S 180 

Post  notes    J%^ 

Willful  misapplication    •'-^° 

Sbnominations — Shares  converted   State   Bank ^      67 

Shares  of  National  Bank  stock 29 

Depositabies — (See  CJovernment  Depositaries). 

Circulating  notes    oo.  oo 

Depositobs — Classes  of   V  "^' ' 2  "fi  "  \" "      't io 

Insolvent  associations  to  recover  must  trace  funds  to  Receiver.  .    17^5 

Loaning  for,  illegal :  •  •  •  •  .•  •  *  *  *,•, ..  ?2 

May  bring  action  against  director  for  losses  through  negligence..   170 
Set  off  against  liability  on  paper 174 


363 

PAGE 

Deposits — (See  also  Lawful  Money  Deposits — Bonds  U.  S.). 

Association   authority   to   repay 11 

Classes  of ll»  12 

Funds    in    controversy 12 

Liability  for  loss  of  special  deposits 11 

Made  after  insolvency,  how  recovered 173 

Not  counted  in  limit  of  indebtedness 122 

Of  bonds  and  securities 11 

Public   moneys 66 

Public  moneys  with  association  in  other  than  Government  deposi- 
taries,  penalty   for 189 

Relating  to  appraisal  of,  damage  for  converted 11 

Replevin   set  off,   etc 62,  173 

Reserve    required    on 106 

Shares  as  collateral  for 39 

Special,    association    may    receive 11 

Transfer  of,  in  reorganization 264 

Uncalled  for  of  association  in  liquidation,  provision  for 153 

Deputy  Comptbolleb — Appointment,  oath,  bonds,  duties,  salary,  etc 3 

Authority  as  Acting  Comptroller 3 

Certified    copy    of    organization    certificate    as    Acting 

Comptroller  evidence  in  court 198 

Prohibited  interest  in  association  issuing  Currency...,  3 
Directors — (See  also  Board  of  Directors). 

Can  act  only  as  a  Board 46 

Cannot  be  examiner  of  own  association 131 

Collectively,  not  individually  agent  of  Corporation 46 

Creditors'  suit  against,  remedy  cumulative  not  exclusive <..  171 

Deposits  personal,  withdrawing  in  crisis 48 

Deposits  special,  liability  for 48 

Disqualified  ceases  to  be  a  director 44 

Disqualification,    resignation     47 

Duties  and  liabilities  in  general  as  of  other  corporations 49 

How  prosecuted  for  violation  of  Bank  Act 170 

Leave  of  absence 47,  49 

Liability  for  false  statement  in  reports 171 

Liability  from  concealing  embarrassment  of  association 48 

Liability  from  ignorance  of  affairs  of  association 48 

Liability  of  estate  of  shareholder  deceased 170 

Liability  of    47 

Liability  on  usurious  loans  to 117 

Loans  to   19 

May  resign  during  year 47 

Names  and  residences  to  be  ascertained  by  Comptroller 34 

No  control  over  capital  released  by  reduction 41 

Oath,  before  what  ofiicer  taken 45 

Oath,   legal   force  of 45,  46 

Oath    required 45,  212 

Oversight  of  association  and  responsibility 47 

Payment  to,  when  ignorant  cf  insolvency  not  illegal 172 

Personal  liability  an  asset  of  Bank  for  benefit  of  creditors 170 

Qualification  of,   and  election 44,  45,  211 

Reorganized  State  Bank  certificate  of  assets  purchased 224 

Representative  holders  of  stock  not  eligible 45 

Resignation  and  when  submitted 47 

Shareholdings  required  free  from  pledge 45 

Stockholdings  approved  though  not  full  paid 45 

Suits  against,  whether  in  equity  or  at  law 171 

Suits  by  shareholder  brought  in  State  Court 194 

Suit  on  personal  liability  remedial  not  penal  so  Statute  of  Limita- 
tion not  apply 170 

Time  of  residence  required  to  act  in  Oklahoma 75 

Women,   when  eligible 45 

Disbursing  Officer's  Funds — Deposit  of 267 

Discounts — (See  also  Loans;  Interest). 

Attorney  fee  clause  affixed 113 

Bills  of  Exchange  not  limit  Individual  borrowing 118 

Embezzlement,   when    178 

Includes  purchase    14,  15 

Mortgage  clause  attached 27 

Notes  on  mortgage  taken  for  debt  may  be  renewed 26 

Prohibited  when  reserve  deficient 105 

Rates  of  interest 108,  109 

Real  estate  and  mortgage  security  prohibited 26 

Security  of  endorsement  charging  personal  estate 26 

Suggestions  as  to  making 242 

Unpaid,  when  become  bad  debts 124 


364 

PAGE 

Discount  Clerk — Position  of  and  duties 241 

District  Attorneys — To  conduct  National  Bank  suits  for  the  U.  S 196 

District  of  Columbia — Associations  in  subject  to  personal  tax 148 

Real  estate  of  associations  in,  taxed  as  other 129 

Savings   Banks  to   report  to   the   Comptroller   of  the 

Currency    129 

Dividends — Association  may  hold  if  pledged  for  indebtedness 121 

Association  not  declare  when  reserve  short 106 

Capital  cannot  be  withdrawn  as 123 

Comptroller  to  make  ratable,  of  insolvent  association 162 

Declaration  of,  in  converting  surplus  to  capital 37 

Directors,  when  may  declare 117,  118 

Due  not  counted  in  limit  of  indebtedness 123 

Explanation  of  items  in  report  to  Comptroller 289 

Illegal,  Receiver  may  sue  to  recover 118 

Liquidating  association,  to  shareholders 250 

Maximum  amount  may  declare 124 

Not  restriction  on  liability  of  association 122 

Of  liquidating  association  property  of  actual  shareholders 152 

On  assets  of  insolvent  association,  provision  for  distribution 162 

On   claim   against   insolvent  association   not  estop   depositor  from 

further  action 164 

Receipt  of  involving  liability  on  stock 55,  56,  57 

Report  to  Comptroller  required  on  declaring 128 

Right  to  set-off  on  assessment 63 

When  may  not  be  declared 124 

When  shareholders  may  compel  Directors  to  declare 118 

Donations — Ofllcers  cannot  bind  Bank 21 

E 

Earnings  and  Dividends — (See  also  Dividends). 

Amount  to  surplus  before  dividend  declared 117 

Provision  in  by-laws  for  distribution 236 

Report  of  to  Comptroller,  and  explanation  of  items 

288,  289 
EJLECTioN — (See  also  Meetings). 

Authority  and  procedure  for  Directors,  etc 10,  44,  211 

Change  of  title  or  location 70 

Of  Judges  for  annual,  provision  in  by-laws 233 

Shareholders'   agent    166 

Shareholders'  rights  at 42 

When  articles  do  not  fix  date  or  not  held  on  day  fixed 49,  50 

Embezzlement — (See  also  Crimes). 

Deposit  of  public  funds  with  other  than  Government  deposi- 
taries       189 

Indictment,  what  must  show  and  penalty 183 

Misapplication  of  funds,  etc.,  penalty 177 

Must  be  shown 178 

When  criminal  laws  of  State  apply 182 

Endorser — Liable  though  purchase  of  paper  by  association  ultra  vires 23 

Engraving  Plates — For  circulation,  association  to  pay  for 101 

Estoppel — Acceptance  of  dividend  on  claim  against  insolvent  association  not 

operative  against  depositor's  further  action 164 

In    Receivership 164 

Shareholder  in  action  by  Receiver  not  deny  legal  existence  of  asso- 
ciation          61 

Evidence — Books  of  association  public  records 63 

Certified  copies  of  organization  certificate 198 

Comptroller  of  Currency  of  insolvency  of  association 155 

Copies  of  papers,  certified  by  Comptroller 197 

Of  association,  carrying  on  business 198 

Examination — Bonds  of  association  on  deposit  with  U.  S.  Treasurer 83 

Comptroller  before  charter  association 34 

Comptroller  on  failure  of  association  to  redeem  circulation. ...      99 

Examiner,  regular,   and  expense 130,  131 

Expense  of  association  supposed  insolvent,  how  paid 164 

Limitation  of  visitorial  powers 131 

List  of  shareholders  subject  to 126 

Of  association,  provision  in  by-laws  for 237 

Of  accounts  of  associations,  suggestion  as  to 241 

Of  new  organization,  follows  granting  charter 36 

Plates  and  dies  of  circulating  notes 87 

Special  of  extended  association 73 

State  Bank  converting  precedes  granting  charter 35,  227 


365 

PAGB 

BxAMiNERs — Appointment,  duties,  powers,  compensation,  etc 130 

In  charge  of  association  not  agent  as  to  resumption  of  business.  .  161 

May  examine  officers  of  association  on  oatti 130 

Officer  may  not  be  of  own  association 130 

Presentment  of  paper  to,  in  charge  of  association 156 

Special   commission    36,  73,   99 

Special  fee  in  large  cities  and  certain  Territories 130 

To  report  condition  of  association  to  Comptroller 130 

Execution — (See  Suits). 
ExECUTOB — (See  Trustee). 

EixpfiNSES — Annual   examination   or  destruction   of  plates   and   dies   of  circu- 
lating notes,  how  paid 87 

Assessment,  for  redemption  of  circulating  notes. 312 

Association  to  bear,  of  special  examination  in  extension  of  charter  73 

Bureau  of  Comptroller  to  be  given  in  annual  report 5 

Circulation  for  redemption,  transportation  and  assorting 101 

Circulation,  semi-annual  duty   133,  134,  315 

Examiner,  regular  and  special 130,  131,  164 

Printing  circulating  notes  to  be  paid  from  tax  on 87 

Protest  of  note  of  association,  how  paid 164 

Publishing  report  of  condition 128 

Reappraisal  for  shareholder  withdrawing  on  extension  of  charter..  74 
Receivership,  appointment  by  the  courts  not  charge  to  shareholders, 

statutory  liability    155 

Receivership,  first  lien  on  assets 165 

Sale  of  bonds  of  association  to  redeem  circulation 98,  101 

Sale  of  delinquent  stock 33 

Shareholders'  ag6nt,  duties  relative  to 167 

Express  Charges — Transportation  of  National  Bank  notes  and  U.  S.  Currency  330 

Express  Company — Government  contract  with  for  transporting  of  currency. . .  330 
Extension  op  Corporate  Existence — (See  Coporate  Existence). 

Failed  Banks — (See  Receivership). 

False  Entries — Defined 179 

In  report  to  Comptroller 180,  181 

Records  of  association,  penalty  for 177 

What  constitutes  offence  of 180,  181 

Fees — (See  also  Examiners,  Receivership,  Expenses). 

Examiners  of  association 130 

None  for  witnessing  assignment  of  bonds  by  U.  S.  minister,  etc 339 

Protesting  circulation  of  association 164 

Special  for  examining  in  cities  and  certain  localities 130 

Federal  Courts — Association  exempt  from  attachment  until  final  judgment.  . .  195 

Enjoining  associations   196 

Jurisdiction  in  action  by  and  against  association.  .191,  192,  193 
Jurisdiction  in  action  by  and  against  Receiver  and  limita- 
tions      193 

Transfer   of   suits 192 

Five  Pee  Cent.  Fund — Association  required  to  maintain  on  circulation  and 

regulations    93,  309 

Deposits  under  Act  June  20,  1874 94 

Ledger  account  of 311 

Transportation  of  notes,  assortment,  etc.,  expense  of. .  101 
Firm  or  Company — (See  Liability  of  Association). 
Forms — (See  also  Subject  requiring). 

Miscellaneous 319 

Forgery — Circulation,  penalty  for 185 

Signatures  to  circulating  notes  not  effect  liability  of  association.  ...  89 

Fragments — U.  S.  and  N.  B.  notes,  redemption  of 312,  328 

G 

Garnishee — Association  in  liquidation  for  creditor 152 

Gold   Banks — Laws  Governing 88,  91 

Government  Depositaries — Association  provision  to  become,  regulations . .  65,  265 

Court  funds    268 

Deposits  allowed    65,  265,  267,  268 

Deposits  by  Postmasters 66 

Disbursing  officers'  and  Postmasters'  accounts     .  267 
Penalty  for  Government  deposits  with  other  asso- 
ciations      189 

Regular  and   temporary 265 

Regulations   for   accounting 268 

Security  for  deposits,  amount  and  kind 266 

To  act  as  fiscal  agent  of  Government 65 


36G 

PAGR 

Greateb  Rate — Application  of  term  governing  taxation  of  shares 141 

Exceptions   as  to 109 

Penalty  for  receiving Ill 

Guaranty — Association   accommodation  illegal 18 

State  Bank  converted  liable  as  guarantor  on  loans  of  old  Bank. ...  68 

H 

Hypothecation — Circulation,  of  association,  prohibited 122 

I 

Impaiembnt — Capital  stock,  how  made  good 12& 

Capital  stock,  provision  against 124 

Incidental  Powers — (See  also  Corporate  Powers). 

If  not  specified  not  necessarily  prohibited 10- 

What    10 

Incomplete  Currency — (See  also  Circulation). 

Association  liable  for 89 

Issuing     314 

Transportation  by  registered  mail  insured 332 

Unlawful  countersigning  or  delivering 176 

Increase  of  Capital.  STOcii — (See  also  Capital  Stock). 

Change  of  location  may  require 7L 

Procedure,   rights  of  shareholders,   fixing  price, 

etc 36,  37,  38,  39 

Indebtedness — Association,  what  limit  of  and  what  not  included 122 

Shares  of  association  held  may  be  attached  for  debt 121 

To  association,   limitation 118 

Indian  Territory — Provision  of  Act  May  2,  1890,  Sec.  31,  that  the  National 

Bank   Act   shall   have   same   force   there   as   elsewhere. 
(See  N.  B.  Associations.) 
Individual  Liability — (See  also  Liability). 

Construction  of  Statute lid- 
Intent  of  restriction  on  loans 119 

Limit    of 118 

Limit  of  loan  only  to  actual  borrower 119,  120^ 

Infant — (See  Minor). 

Injunction — Against  association  by  State  and  Federal  Courts 196 

Not  issue  against  association  before  final  judgment 194 

Of  Comptroller   196 

To  restrain  collection  of  excessive  tax 147 

Insolvency — (See  also  Receivership). 

Appointment  of  Receiver,  because  of 154 

Creditors,    how   proceed 61 

Defined    171 

Duties  and  powers  of  Receiver 157 

Liability  on  stock  not  a  preferred  claim  on  estate 63 

Limitations  on  tax  assessment 135 

Proof    of 155 

Restriction  on  transfer  of  stock 31 

Shareholders'  agent,  appointment  of,  duties  and  powers 167 

State  statute  prohibiting  association  receiving  deposits,  not  ap- 
plicable      183 

Transfer  of  stock,  etc.,  in  contemplation  of,  void 171 

U.  S.  suits  against  association.  Government  may  appoint  special 

attorney    197 

Interest — Appointment  of  attorney  to  collect,  form  of 341 

Agreement  with  customer  to  equalize  not  usury 110 

Associations  protected  against  unfriendly  State  legislation 109 

Collection  of,  on  bonds  with  Treasurer 84,  339 

Form  of  power  of  attorney  to  collect  on  XJ.  S.  Bonds 340 

Form  of  power  of  attorney  to  endorse  Treasurer's  checks  for 341 

General  State  rate,  not  special  rate,  governs 110 

Illegal,  association  not  liable  when  only  five  cents 117 

Illegal,  forfeiture  not  waived  by  separate  note  for 117 

Illegal  rate,  entire  amount  forfeited 112 

National  Banks  may  pay  on  deposits 11 

On  claims  and  judgment  against  insolvent  association 162 

On  public  debt  not  payable  in  National  Bank  notes 88 

Pajonent  on  U.  S.  Bonds  to  joint  holders,  minors,  etc 342 

Period  included  in  two  years  limitation  to  recover  usurious 114 

Rate,  limit  association  may  charge 109,  110 

Rate,  when  State  law  does  not  fix  or  rate  unlimited 110 

Usurious,  charged,  effect  on  contract 115 

Usurious,  action  to  recover  only  if  interest  actually  paid 114 


367 

PAGE 

Interest — Usurious,   Federal   law   governs   though   security   In   name   of   in- 
dividual         116 

Usurious,  Jurisdiction  of  State  courts  in  action  for 116 

Usurious,  included  in  notes  renewed  not  recoverable 113 

Usurious,  penalty  enforcible  only  when  knowingly  received 113 

Usurious,  penalty  for  receiving Ill,  114 

Usurious,  paid  after  maturity  of  paper 112 

Usurious,  who  may  bring  action  for  penalty 114 

Usury,  law  of  State  not  applicable  to  associations 116 

When  U.  S.  Treasurer  retain  on  bonds 84,  85,  125,  129,  124,  134 

J 

Judgment — (See  also  Suits). 

Association  assigning  without  collecting 21 

Certificate  assigned  to  association  not  release  debtor 23 

For  usury  when  allegations  sufficient 113 

Notes  of  as  security 27 

Purchase  of  real  estate  under 24 

Receiver,  appointment  for 154 

State  Courts,  final  before  certain  proceedings 194 

To  Receiver  for  assessment  on  stock  not  estop  action  for  another 

assessment     63 

JUBISDICTION — Association  deemed  citizen  of  State 194 

Of  suits  by  and  against  association 159,  160,  191,  193 

Of  state  Courts  in  action  for  usury 116 

Receiver    for    Insolvent    association,    court    of    equity   may    ap- 
point     155 

L 

Larceny — (See  Crimes). 

Lawful  Money — Defined    94,  97 

Deposit,  how  made  to  retire  circulation 97 

Circulating  notes  of  failed  Bank  to  be  redeemed  with.... 98,  100 

Circulation  of  association  redeemable  in 108 

Reserve  of  association  to  be  in 105 

Lawful.  Money  Deposit — Association  making  to  retire  circulation  to  be  as- 
sessed for  transporting  and  assorting 101 

Extended  Banks  to  make,  to  retire  circulation  and 

limit  of  time 96 

Liquidating    association    to    retire    circulation    and 

limit  of  time 97,   98,  152 

Maximum  amount  permitted  in  any  month  to  retire 

circulation    96 

Requirement  to  redeem  circulation,  question  of .  .  .  .      99 
Retiring  circulation  on  called  bonds,  monthly  limit 

of  deposit  not  apply 96 

Retiring  circulation  not  prevent  immediate  reissue 

of  circulation    86 

Retiring  circulation  on  expiration  of  charter 75 

To   cover   depreciation   of   bonds,    security   for   cir- 
culation       85 

To  release  bonds  on  deposit  In  excess  of  minimum 

required    79 

To   retire  circulation 95,  248 

Lawful  Money  Reserve — (See  Reserve;  Lawful  Money). 

Lease — Banking  House,  liability  of  insolvent  association 156 

Of  Banking  House 25 

Only  valid  after  association  chartered 25 

Leave  of  Absence — Board  may  give  Director  and  during  relieve  of  liability. .      49 

Directors   47 

Legal,  Tender — Defined 94 

National  Bank  circulation  to  be  with  all  associations 108 

Llabilities — (See  also  Liability), 

Association  report  of  condition  to  contain 127 

Association,  change  of  name  and  location  not  effect 71 

Associations  organized  under  Act  of  1863 70 

Borrowed  Money    282,  286 

Comptroller's  annual  report  to  contain  of  associations 5 

Converted  State   Bank 67 

Dividends  due  not  counted  In  limit  of  association's  Indebtedness.    123 

Extended  associations   71 

Individual  or  firm  limit,  to  association,  and  when  applicable. . . .   118 

Limit  allowed  association 122 

Liquidating  association  conKondating,  assumption  of 255 

Receiver,  duties  as  to«  of  association 154,  15T 


368 

IJABILITY — (See  also  Liabilities;  Penalty;  Crimes).  ^^^^ 

Association  refusal  to  transfer  stock 31 

Association  under  Receiverstiip  for  lea.se !!!!!!!    156 

Association  liable  for  conversion  in  purchase  of  notes,  when  given 

it  for  sale 23 

Association  when  illegal  interest  stipulated  for  not  paid  or  paid! . !   112 

Creditor's  bill , 154 

•    Directors'   mismanagement   of   association ..*.*.*.'.*...*  48 

Enforcement  may  be  in  equity !.!!!!!!'      61 

Estate  of  deceased  shareholders .'....',     *     53    64 

Executors  not  personally  liable  on  stock  held  as  such.'.'.'. ,  . .'.  '64 

False  entries   279 

Fraudulent  intent  in  transfer  of  stock  not  relieved.  ...'.'.....'...'.'.      54 
Individual  not  enforcible  by  Receiver,   except  on   order  of  Comp- 
troller     g2    159 

Individual  or  firm  limit  to  association *. .  .  .'..*.,.. . .'  118 

Individual  not  enforcible  after  all  debts  paid 63 

Individual  on  shares,  not  preferred  claim  against  estate. ..!.'!!!.'!      63 
Individual,  Comptroller  may  enforce  when  association  Insolvent  154,  157 

Loans,  actual  borrower  alone  chargeable 119 

Pledgee,  when !!..!!      57 

Pledging    circulation,    etc ! !  !  !  !    177 

Procedure  in  enforcing  on  stock  when  Bank  in  liquidation ........     64 

Receiver,  if  reserve  short  and  not  made  good 106 

Shareholders,   how   enforce 153 

Shareholder  liable  though  purchase  stock  on  misrepresentation....      64 

Shareholder's   personal    51,  62 

Shareholders  to  successive  assessments  on  stock 63 

Shares  for  all  creditors,  no  preference 60 

Shares  as  collateral,  when  not  liable 58 

Shares  owned  of  another  association 17 

Shares  transferred  not   registered 54 

Shares,  when  registered 64 

Subscriber  to  increased  capit?  1,  when 56 

Transfer  of  stock  when  relieved  of 54,  55,  56 

Transfer  of  stock  to  avoid 59 

Unlawful  certification  of  checks 126 

When  fixed  by  assessment,  right  of  action  may  be  assigned 63 

When  purchaser  in  case  of  fraud  not  liable 60 

When  association  released  on  circulating  notes 98 

License  Tax — (See  Taxation). 

Lien — Association  may  sell  on  credit  to  acquire 20 

Association  not  acquire  on  own  stock 121,  213 

Illegal  preference  of  creditors 171 

Interest  on  bonds  U.  S.  on  deposit  with  Treasurer 128,  134 

U.  S.  prior  to  assets  of  failed  association 100 

U.  S.  on  assets,  for  circulating  notes 101,  163 

LIMITATION — Association  minimum  reserve  on  deposits 106 

Association,  rate  of  interest 109 

Association  declare  dividends,  when  not 117 

Authority  of  Court  as  to  sale  of  property  of  Insolvent  association.    158 

Banks  in  Territories  not  issue  circulation 75 

Capital  of  State  Bank  converting  to  National 67 

Capital   stock,   requirement 28 

Capital  stock,  impairment  of  and  assessment 33,  125 

Change  of  name  and  location 70,  71 

Circulation,   denominations    86,   87 

Circulation  of  association  on  depreciation  of  bonds  deposited....      85 

Circulation,  taxable  only  as  personal  property 148 

Corporate  existence   9 

Creditors  of  insolvent  as.sociatIon  on  lease  of  building 156 

Deposits  with  associations  as  Government  Depositaries 65,  266 

Destruction  of  notes  of  liquidating  association  after  redemption. . .  .98 

Directors,  minimum  number 44 

Director,  minimum  stock  holding  required 44 

Issue  of  attachment,  etc.,  before  final  judgment  prohibited 194 

Lawful  money  deposit  of  extending  association 96 

Lawful  money  deposit  of  liquidating  association 97,  98 

Liability  to  association  of  person  or  firm  and  when  applicable. . . .    118 

Minimum  bond  deposit  of  association  with  U.  S.  Treasurer 79,  80 

On  real  estate  and  mortgages 24 

Period  for  taking  action  as  to  illegal  Interest 114 

Place  of  business 104 

Post  notes,  application  of  prohibition 90 

Heceiver  on  impairment  of  stock,  when  appointed 33 

Reserve  with  agent lOG 


369 

PAGB 

XiUaxATioN — Shareholders'  personal  liability 52 

Shares  of  stock,  par  value 29 

Statute  of,  may  bar  assessment  on  stock 62 

State  taxation,  shares  of  association      138 

Suit  for  usury 114 

Tax  on  insolvent  association 135 

Tax  returns  on  circulation 134 

Time  allowed  for  payment  of  capital 32 

Transmitting  report  of  condition  to  Comptroller 127 

Use  of  word  National 132 

Visitorial  powers  with  association 131 

Voting   at   elections 42,  43 

What  indebtedness  may  exceed  capital  stock  paid  in 122 

Liquidation  or  Insolvent  Association — (See  Receivership). 

Liquidation  Voluntaky — Association  in,  penalty  for  issuing  circulation 188 

Association  reorganizing    263,  264 

Association  to  consolidate,  procedure 152,   253 

Association  to  deposit  lawful  money  to  withdraw  cir- 
culation     97,  98 

Authorization  to  close  association  and  form  of  reso- 
lution     246 

By  expiration  ot  charter 251 

Certiflcate  to  Comptroller  of 247 

Certificate  to  Comptroller  on  expiration  of  charter...    252 

Committee  association  may  appoint  for 153 

Consolidating  association,  increase  of  capital  for. .  . .    255 

Consolidation,  allotment  of  stock 255 

Consolidation,  assumption  of  liabilites 255 

Consolidation,  payment  for  stock 255 

Consolidation,  purchase  of  assets 255 

Corporation  not  dissolved 151 

Creditor  or  depositor  still  may  garnishee  association,  152 
Destruction  of  notes  of  liquidating  association  after 

redemption 98 

Dividends    of    association    liquidating,    property    of 

shareholders   152 

Extension  of  corporate  existence  only  for 253 

No  new  business  or  make  new  contracts 151 

Not  debar  Comptroller  appointing  Receiver 150 

Notice  to   creditors 247 

Notice  required   152 

Procedure  and  form 150,  153,  246,  256 

Procedure  to  «;nforce  shareholders'  liability 153 

Provision  for  destruction  of  plates 87 

Provision  In  charter  for 9 

Purchase  of  assets  of  State  Bank  reorganized 225 

Shareholders'  right  to  inspect  books,  how  enforce...    151 

Shareholders'  agent  for   250 

Shareholders'  rights  In  consolidation 254 

To  sell  business  or  reors^anize 150,  251 

When  take  effect.  Immediate  or  future 153 

List  of  Shabeholdebs — Annually  furnished  Comptroller  of  Currency 127 

Association  required  to  keep 127 

State  may  require  of  officers  with  residence,  for  tax- 
ation of  shares 147 

Loans — Actual  borrower  governs  as  to  limit  to  individual 119 

Association  can  recover  though  excessive 120 

Association  not  on  own  stock 121 

Borrower  liable  loan  on  real  estate  though  Illegal 27 

Care  required  in  making 242 

Circulation  not  collateral  for 122 

Excessive,  directors'  personal  liability  on  damage  from. ..." 47 

Excessive  to  individuals,  penalty 120 

Illegal  interest HI 

Individual  or  firm  limit,  etc 118 

Interest   allowed    109 

Liabilities,  what  not  limit 122 

Real  estate  as  security  prohibited 25 

Report  to  Comptroller 181,  277 

Reserve  short  not  allowed 105 

Usurious  to  Directors'  liability  holds 117 

Location  or  Association — Chanjre  of  and  provision  for 70,  71 

Comptroller  holds  legal  location  street  and  number       9 

Defined 104 

Organization  certiflcate  to  state^   and  how  desig- 
nated           9 


370 

page: 
Lost  or  Destroyed  Circulation — (See  Circulation). 

Lost,  Defaced  or  Destroyed  U.  S.  Bonds — (See  Bonds  U.  S.). 

Louisiana  Purchase  Exposition — Provision  for  Branch  Bank  at 76 

M 

Maceration — Circulation  worn  and  mutilated  to  be  destroyed  by ICJ 

Management  of  Association — Suggestions  as  to ',[  238 

Married  Women — As  corporators  of  association 202 

As  shareholders  and  directors ,,',  45 

Liability    as    shareholders \[  53 

Personal  security  in  endorsement ,  13 

Messenger — Position  and  duties \  241 

McCuLLOCK,  Hugh — First  Comptroller  of  the  Currency .',  5 

Meetings  Shareholders — Annual  when  no  election  of  directors 49 

^l^nnual,  held  on  wrong  day,  remedy 60 

Annual,  when  to  be  held  for  election  of  Directors. .  44 
Annual  only  Directors  elected  unless  notice  of  other 

business    44 

Capital  increase,  to  provide  for 36 

Fixing  date  of,  if  not  in  Articles 50 

Individual  rights  of  at 42 

No    definite    representation    of    stock    required    for 

annual    44 

Provision  for 42 

Provision  against  failure  to  hold 50 

Provision  for  holding  if  day  not  fixed  or  meeting 

not  held   50^ 

Provision  in  by-laws  for  holding 233 

Shareholders  what  disqualifies  to  vote 44 

Shareholders  who  may  not  vote  proxies 43 

What  constitutes  a  quorum 46 

When   no   election   held   possible   action   by   Comp- 
troller      50 

Minors — Bonds  TJ.  S.  standing  in  name,  interest,  how  paid 342 

Corporator  of  association  not  to  be 202 

Purchase  of  stock  in  name  of,  liable 60 

Misapplication  or  Funds — Association  indictment  for 183 

Penalty  for    177 

Willful,  application  of  Statute 178 

Miscellaneous  Forms — (See  Forms). 

Misdemeanors — (See  Crimes,  Penalty). 

Moneyed  Capital — How  distinguished  from  personal  property  In  assessment  of 

shares 140 

Meaning  of  term  governing  taxation  of  shares 140 

Taxation  of  (see  Taxation). 

Mortgages — Debentures  of  mortgage  loan  companies  as  collateral 26 

Foreclosure   by   association 26 

Limitation  on  holdings 24 

Mortgagee  liable  on,  though  associaton  exceed  power  In  taking. . .  23 

Note  for,  taken  for  debt,  may  be  renewed 26 

Ofllcial  malfeasance 177 

Purchase  of  by  Receiver 165 

Selling  of  farm 20 

To  endorser  of  note  may  Inure  to  benefit  of  association 27 

Taken  for  debt,  rights  In  holding,  etc 36 

MUNlClPAii  Funds — Association  may  receive  as  deposit 11 

Mutilated  Notes — Provision  for  destroying  and  replacing 90 

Redemption   of   fragments 312,  328 

To  be  sent  to  U.  S.  Treasurer  for  redemption 93 

N 

Names — Association  required  to  keep  shareholders 127 

Directors  to  be  furnished  Comptroller  annually 45 

Of  associations  (see  Title). 

Shareholders  to  be  furnished  Comptroller  annually 127 

National — Restriction  on  use  of  word 132 

National  Banking  Association — Government  supervision  of  by  Comptroller 

of  the  Currency  under  direction  of  Secre- 
tary of  Treasury,  and  annual  report  to 

Congress     1—6 

Circulating  notes. 

Issue,  redemption  and  withdrawal  cf. 
U.  S.  Bonds  security  for  deposit  of,  for- 
feiture,  etc 77-103 


371 

PAOB 
NATIONAL  BANKING  ASSOCIATION— Organization  and  powers  of 

Organization  papers  to  be  executed,  capi- 
tal required  and  payment  of  U.  S.  Bond 
deposit  required,  corporate  powers,  gen- 
eral and  Incidental,  Board  of  Directors, 
liability  of  shareholders,  increase  or  re- 
duction of  capital  stock,  change  of  title 
or  location,  extension  of  corporate  exist- 
ence, conversion  of  State  Banks^  deposi- 
tary of  public  moneys,  etc.,  etc. 

7-76,  201-237,  257-269 
Regulation  of  Banking  Business, 
li-arnings,  diviaenas  and  surplus. 
Examiners,  examinations,  visitorial  pow- 
ers, etc. 
Interest  rate  of  and  restrictions. 
Liability  of  and  to  associations. 
Loans  and  restrictions  on. 
Place  of  business. 

Real  estate,  limitations  as  to  holdings  of. 
Reports  to  Comptroller. 
Reserve  required. 
K,GS6rv©  cit.i6s 

Management 103-132,  238-245,  271-314 

Taxation. 

State,  what  subject  to,  rate,  etc 138—150 

Circulating  notes,   rate,   assessment,   col- 
lection, etc 183,  315—318 

Crimes  and  misdemeanors 176-190 

Suits,  jurisdiction  and  evidence 191-198 

Voluntary     liquidation     and     Receivership, 

provisions  respecting    150-175,   246-256 

NATiOaiAi.  Bank  Act — Comptroller  to  execute,  but  his  construction,  persuasive 

not  final    2 

February  25,  1863,  Banks  organized  under 70 

Index  to  sections  and  amendments 25,  26 

The  title  and  object 1 

National  Bank  Notes — (See  Circulation). 

National  Banking  Laws — (See  National  Bank  Act;  National  Banking  Asso- 
ciations). 
National  Bank  Redemption  Agency — Division  of  U.   S.  Treasurer's  Offlc« ; 

pvovision  for  redemption  of  circula- 
tion of  association    92 

National  Bank  Reserve — (See  Reserve). 

National  Cukrency — An  act  to  provide 1 

National  Gold  Banks — Circulation  to  be  issued  to  on  deposit  of  bonds 90 

May  convert  to  regular  association 69 

None  now  in  existence 70 

Not  required  to  take  circulation  of  other  associations 

at   par 108 

Provision  for   90 

Nattjbal  Pebsons — Only  may  organize  association,  what  constitutes 8,  201 

Net  Profits — (See  Profits). 

New  York  City — Association  in  may  be  reserve  agent 105,  106,  107 

Bonds,  forfeited,  sale  of  in 101 

Notice    of    expiration    of    corporate    existence    or    voluntary 

liquidation   published   in 75,  153 

Sale  of  bonds  to  redeem  circulation  to  be  made  in 98 

NON-BESIDENTS  OF  STATE — Directors  allowed  by  law 44 

State  taxation  of  stock  of 139 

Notary  Public — Acknowledgment  reports  to  Comptroller 128 

Acknowledgment,   organization   certificate  to  be   taken  by  or 

Judge  of  court 9,  215 

Directors  make  oath  before 45 

Provision   to  protest   notes   if  not   redeemed,    and   notice   to 

Comptroller    98,  99 

Shareholders'   list,   acknowledgment  of 126 

NOTICF — (See  also  Publication). 

Application  to  organize  to  Comptroller 205 

Appraisal  dissenting  stock,  in  extension 74 

Capital,  increase  of,  to  Comptroller 36,  37,  38 

Capital,  reduction  of  to  Comptroller 40 

Comptroller  of  Currency,  of  impairment  of  capital 125 

Comptroller  of  Currency,  receipt  of  bonds  to  secure  circulation 81 

Comptroller  of  Currency,  to  advise  association  of  transfer  of  bonds ...      82 
Comptroller  to  association  on  restraint  of  protest  of  notes 99 


372 

FA6B 

Notice — Comptroller  to  holders  of  circulating  notes  of  failed  association  to  pre- 
sent    100 

Extension  of  corporate  existence 72,  73 

Meeting  for  election  of  Directors  postponed 49 

Meeting  of  shareholders  when  annual  not  held 49 

Meetings,   shareholders    42 

Name  and  location,  change  of,  to  Comptroller      70 

Protest  on  circulating  notes  to  Comptroller 99 

Reserve  to  make  good 105 

Sale  of  bonds  of  failed  association 100 

Shareholders'  meeting  to  close  association 151 

Special  for  business  other  than  election  of  Directors  at  annual  meet- 
ing      44 

To  Comptroller,  payment  on  capital 33,  34 

Treasurer  of  the  U.  S.  to  notify  association  of  circulation  redeemed. . .  92 

o 

Oath — (See  also  Notary  Public). 

Comptroller  of  Currency,  of  Office 2 

Deputy  Comptroller,  of  Office 3 

Directors,  of  Office,  and  form  of 45,  212 

Directors,  law  not  provide  before  what  office  taken 45 

Officers  and  Directors  certifying  to  Comptroller  payment  of  capital. . .  32,  35 

Officers  of  association,  tax  returns  on  circulation 134 

Organization  Certificate,  corporators'  acknowledgment 9 

Publishers,  of  notice  of  certificate  to  begin  businesss 36 

Obligations — (See  Bonds  U.  S. ;  Crimes). 

Office  of   Comptkolleb   of   Currency — (See   Comptroller   of   the    Currency 

Office). 

Officers  of  Association — (See  also   President;   Cashier).             ^^    ^^      «  „.« 

Bonds  of 10.  22,  48,  242 

Cannot  be  examiner  of  own  Bank 131 

Certifying  Comptroller  of  vote  for  voluntary 

liquidation    1B2 

Certifying  payment  of  stock  to  Comptroller. 

32,  35 
Commission    cannot    offer    for    securing    de- 
posits      21 

Election  or  appointment  of  by  Board  of  Di- 
rectors     10,  242 

Expiration   of  corporate   existence   certifica- 
tion      74,  252 

Extension  of  corporate  existence,  application 

to  Comptroller    72,  260 

Failure  to  record  transfer  of  stock  liability 

for    54 

Impairment  of  capital,  duties  In  regard  to.  33 

Increase  of  capital,  payment  of 37 

Independent  action  of,  not  to  forfeit  charter  169 

Loans  to    19 

May  be  examined  by  Examiner 130 

May   not   vote   proxies 42 

Not  bind   association   by   guarantee   to   pay 

draft    20 

Not    indictable    under    State    law    for    em- 
bezzlement      182 

Penalty  for  embezzlement,  etc.,  of  funds  and 

false   entries    177,  178,  179 

Penalty  for  illegal  certification  of  checks. .  .  184 
Penalty    for    Issuing    circulation    after    ex- 
piration of  charter 188 

Penalty    for    receiving    U.    S.    or    National 

Bank  notes  as  security 177 

Penalty  for  official  malefeasance 177 

Petition   for  designation   as   reserve  city  to 

be  signed  by 108 

Prohibited  certifying  checks  not  covered  by 

deposit    126 

Provision  for  in  by-laws 233 

Returns  to  make  on  circulation  for  taxation  134 

Sale  to  association  of  shares 122 

Signing  circulating   notes 87,  88,  89,  221 

Term  of  office  the  pleasure  of  Board 22 

Transfer  of  U.  S.  Bonds  security  for  circula- 
tion      81 

Willful  misapplication  of  funds 178 


373 

PAGB 

OFncERS  or  U.  S. —  (See  Government  Depositaries;  Penalty;  Crimes). 
Official.  Bonds — (See  Bonds,  OfBcial). 
Official  Signatures — (See  Signatures). 

OkIaAuoma — ProTision  for  National  Banks  in.  and  qualification  of  Directors...  75 
Obganizaxion  or  Associations — Autboriaation.  who  may  participate  and  pa- 
pers  to  be  executed 8 

Capital  may  be  subscribed  by  a  few  and  later 

distributed    204 

Capital  required  and  payment  of 28,  32 

Circulation  (see). 
Corporate  Powers   (see). 
Directors  (see). 

How  effected,  and  forms 201-237 

Lease  and  purchase  of  building 25 

Location   of  association 9,  105 

Stock    certificates,    temporary 205 

Oboanization  Certimcatb — Acknowledgment  required 9 

Certified  copy  as  evidence 197,  198 

Conversion  of  State   Bank 66,  229 

Determines  place  of  business 104 

Execution  of 9,  215 

Specifications  and  form  of 8,  214 

Organization  Papers — Enumerated 207 

Execution  of    9,  66,  207,  229 

When  to  be  filed  with  Comptroller 217 

OvERj>RAFTS — False  entry,  when  and  when  not 180,  181 

Interest  on 112 

When  allowed  should  be  on  demand  note 277 

When  embezzlement   179 


Partnership — Association  may  not  be  member  of 21 

Loans  to  each  member,  limits  to  firm 119 

Payino  Teller — Position  of  and  duties 240 

Penalty — Appointment  of  Receiver  for  violation  of  Bank  Act 169 

Association  receiving  usurious  interest Ill,  114 

Counterfeiting  or  forging  circulating  notes 185 

Directors  for  violation  of  Bank  Act 169 

Embezzlement,  abstraction  and  misapplication  of  Bank's  funds 177 

Excessive  loans  to   individuals 120 

Failure  to  pay  installment  on  stock 33 

Failure  to  make  report  of  condition 129 

Failure  to  make  return  for  tax  on  circulation 134 

Failure   to   redeem   circulation 84,  154 

Illegal  certification  of  checks 126 

Illegal  use  of  word  "  National  " 132 

Illegal  possession  of  imprints  of  counterfeit  U.  S.  Bonds 188 

Imitating  circulating  notes 91 

Interest  on  deposit  with  Treasurer,  when  withheld 85 

Issuing  circulation  after  expiration  of  charter 188,  189 

Loaning  on  U,  S.  and  National  Bank  notes  as  security,  etc 176 

Mutilating  circulating  notes,  etc 92 

None  prescribed  for  printed  signatures  on  circulation 89 

Passing  counterfeit  U.  S.  obligations 187 

Passing,  selling,  etc.,  counterfeit  circulating  notes 187,  188 

Receiving  deposits  of  public  moneys  If  not  depositaries 189,  268 

Reserve  not  maintained 105 

Shares  of  association  taken  as  security  for  debt  if  not  disposed  of. .  121 

Taking  impressions  of  plates  of  circulating  notes 187 

Taking  or  having  impressions  of  tools,  etc.,  of  U.  S.  obligations....  188 

Unauthorized  possession  of  impressions  of  circulating  notes 188 

Unlawful  countersigning  circulating  notes  by  officers  of  the  Govern- 
ment      176 

Wrongful  use  of  plates  or  false  plates 186 

Personal  Liability — (See  Liability;  Shareholders;  Trustees). 

Personal  Property — (See  also  Taxation). 

Shares  of  association  taxable  only  as 138 

Personal  Security — (See  Loans). 

Place  or  Business — Defined 104,  105 

Circulating  note*  payable  on  demand  at 86,  92,  100 

List  of  shareholders'  residence  and  shares  kept  at 127 

To  appear  in  Organization  Certificate 9 

Plates  and  Dies — Comptroller  to  have  prepared  for  circulation 80 

Comptroller  to  have  custody 4,  87 

Engraving,  association  to  pay  for  and  cost  of 101,  222 


374 

PAGH 

Plates  and  Dies — ^Expense  of  examination  and  destruction  of 87 

Extended   Banks    97 

False,  penalty  for 186 

Of  circulating  notes,  Comptroller  to  examine  annually. ...     87 

Penalty  for  unauthorized  possession 188 

Taking  impression  from,  penalty  for 187 

Wrongful  use  of,  penalty  for 186 

Pledgee — Liable  on  shares  if  registered 57 

Of  stock  as  collateral  not  liable  though  registered  if  so  noted 68 

Of  stock  not  registered  not  liable 68 

Pledging  Cikculation — (See  Hypothecation). 

Population — Change  of  location.  Comptroller  ascertain 71 

Comptroller  findings  not  final 28 

Evidence  of  Mayor  of  place  as  to 29 

Relation  to  capital  and  how  determined 28 

Postmasters — Deposit  of  public  funds  with  association 66,  267 

Post  Notes — Association  prohibited  circulating  as  money 89 

Defined     90 

Issue  only  prohibited  as  money 90 

POWEB  or  Attokney — Assignment  of  U.   S.   Bonds 336 

For  endorsing  interest  checks 341 

Form  of,  to  collect  interest  on  U.  S.  Bonds 340 

Form  of,  for  shareholders  in  extension  of  charter 259 

Form  of,  to  send  currency  by  registered  mail  insured. .   325 

Form  to  act  for  corporator 202 

Proxy  of  shareholders  to  extend  corporate  existence.  .  .  .    259 
Required  for  agent  of  association  to  witness  destruction 

of  notes  and  examine  bonds,  and  form  of 83,  90,  324 

Powers — (See  Corporate  Powers). 

Preference — Government  on  circulating  notes  only 101,  163 

Recovery  of  deposits  made  after  insolvency  not  constitute 173 

Shareholders   for   stock   in   association    succeeding   another   and 

retaining  name   74 

State   Statute   making   certain   deposits   prioj*   lien   on   insolvent 

association   not   applicable 175 

What  constitutes  in  insolvency,  and  what  not 172 

President — (See  also  Officers  of  Association). 

Absent  from  sickness  not  liable  for  mismanagement 47 

Acting  as  Cashier  association  bound  by  acts 51 

Action  required  In  extension  of  corporate  existence 72,  260 

Action  required  to  prevent  protest  of  circulating  notes 98 

Authority  of   51 

Bond  of,  when  binding 22 

Certificate  of  stock  payment  to  Comptroller 32 

Director  to  be 50,  51 

Duties  defined  In  by-laws 234 

Elected  by  Board  of  Directors 10 

Employment  of  legal  attorney  binds  association 20 

False  certification  of  checks 126,  185 

Liable  for  loans  to  minors 51 

Liable  for  statement  of  condition  of  association 180 

Limitation  of  powers 51 

List  of  shareholders  to  keep 127 

Managing  association,  may  obtain  discount  of  its  paper 16 

May  act  for  association  to  purchase  real  estate 24 

May  be  examined  by  Examiner 130 

Not  donate  funds  for  business  Interests  of  association 21 

Office  of   239 

Official  malefeasance,  penalty 177 

Powers  of,  ex-officio  and  vested 50,  51 

Presiding  officer  of  Board 50 

Provision  in  by-laws  for  election,  etc 232,  233 

Proxy  not  act  as 42,  43 

Public  money,  unauthorized  receipt  by 189 

Report  of  condition  to  Comptroller,  oath  to 127 

Report  on  circulation  to  Comptroller 124 

Signature  of,  or  "Vice-President  required  on  circulation  87,  88,  89,  221 

Term  of  office  the  pleasure  of  Board  of  Directors 22,  51 

To  certify  Comptroller  of  liquidation  on  expiration  of  charter. . . .    2o2 
To  certify  dividends  declared  and  net  earnings  to  Comptroller. . . .    128 

Violation  of  Bank  Act,  penalty 169 

President  of  U.  S. — To  appoint  Comptroller,  and  power  of  removal 2 

Printing — Charter  number  to  be   on  circulation •  •  •  •     87 

Circulation  and  time  required 87,  221,  222 

Comptroller's  annual  report 6 

Extended   association,   circulation •  •  •      97 

Signatures  of  officers  on  circulation .'.89,  221 


375 

PAGB 

Prtvatb  Banks — Reorganization  of  as  National 223,  225 

Pbofits,  Net — Amount  to  surplus  before  dividends  declared 117 

Losses  deducted  before  declaring  dividends 123 

Other  than  legal  surplus « 123 

Report  of  to  Comptroller 127 

Undivided,   defined    123 

Promissory  Notes — Attorney  fee  clause 113 

Set  off   for  endorser 174 

With   mortgage   clause 27 

With  unlawful  interest,  payments  applied  on  principal.  . .  Ill 

Protest  of  Circulation — Bonds  forfeited  for,  when 100 

Bonds,  sale  of,  when 101 

Expense  of,  how  paid 164,  165 

Failure  to  redeem 154 

Mode  of    98 

Notice  of  to  Comptroller 99 

Proxies — Form  of  for  election  of  Directors 319 

Not  bind  principal  in  illegal  meeting 43 

Shareholders  may  vote  by 42 

Who  prohibited  acting  as. 42,  43 

Publication — (See  also  Notice). 

Change  of  title  or  location,  notice  of 70 

Comptroller's  certificate  of  extension  of  charter 73 

Comptroller's  certificate  to  begin  business 36 

Comptroller  notice  to  creditors  of  insolvent  association 161 

Meeting,  shareholders  to  elect  agent  insolvent  association 166 

Meeting   shareholders   for   other   business   than   election   of   Di- 
rectors      44 

Meeting  shareholders,  postponed  election  of  Directors 49 

Meeting  shareholders  to  close  association 151 

Non-payment  of  circulation,  notice  to  present 100 

Report  of  condition  of  association 128 

Sale  of  bonds,  notice  of 101 

Sale  of  delinquent  stock 33 

Voluntary  liquidation,  notice  of 152,  153 

Public  Auction — (See  Auction). 

Public  Moneys — Deposits  with  association 65 

Penalty  for  deposit  with  other  than  Government  depositaries.  189 

Regulation  in  regard  to  deposits  with  depositaries 66,  265 

Q 

Qualification — Comptroller  of  the  Currency 2 

Deputy    Comptroller 3 

Directors     44,  45,  211 

Directors  of  association  in  Oklahoma 75 

Examiners  of  association 130 

Officer  before  whom  organization  certificate  executed 9,  216 

Receivers  of  association 154 

Shareholders'  agent •. .  169 

Quorum — Board  of  Directors  and  provision  for  in  by-laws 46,  237 

Law  not  require  in  meetings  for  election  of  Directors 44 

R 

Rate  of  Interkst — (See  Interest). 

Real  Estate — (See  also  Taxation). 

Assignment  of  certificate  of  Judgment  to  association  not  Invali- 
date      23 

Association,  how  taxable  by  State 138,  139 

Associations  In  District  of  Columbia,  taxation  of 148 

Conveyance  not  void  though  association  exceeds  rights 27 

Conveyance  of,  provision  for  In  by-laws 235 

Discounting  paper  having  real  estate  security 25 

Estimated  at  actual  value  in  valuation  of  shares  for  taxation . .  142 

Excessive  investment  In  Banking  House 25 

How  association  proccv^d  to  purchase 24 

Illegal  borrowing  on,  not  defence  against  association 27 

In  Indiana  not  Included  In  valuation  of  shares  for  taxation.  . . .  142 
In  Indiana  tax  paid  on  In  valuation  of  shares,  when  not  recov- 
erable       142 

Limitation  on  holdings 24 

May  be  taken  for  more  than  the  debt 26 

Mortgage  of  maker  to  endorser  as  collateral 27 

Mortgage  to  endorser  enuring  to  benefit  of  association 27 

Not  in  State,  included  in  tax  valuation  of  shares 145 


376 

PAGE 

Real  Estate — Objection  to  as  security  for  loans,  kind  not  suflBlciency 28 

Policy  of  restrictions  on  real  estate  dealings 27 

Purchase  by  Receiver  to  protect  equity  involved 165 

Purchase  only  voidable  by  the  Comptroller 27 

Security  of  indorsement  charging  personal  estate 26 

Stock   as   collateral 27 

Stock  of  real  estate  companies 26 

Violation  of  law  not  hinder  foreclosure 26,  27 

When  association  authorized  to  acquire 25 

Rbcbivee — (See  also  Receivership). 

Acting  for  shareholders  after  creditors  paid 167 

Action  against  for  property  noc  strictly  of  association 173 

Appointment  on  failure  to  restore  impaired  capital 33,  125 

Appointment  for  association  holding  own  stock 121 

Appointment  for  failure  to  pay  circulating  notes 154 

Appointment  when  association  franchises  forfeited 154 

Appointment  for  insolvent  association  not  unconstitutional 155 

Appointment  does  not  dissolve  corporation 156 

Authority  to  enforce  liability  must  furnish 61 

Books  of  association  admissible  evidence 63 

Cannot  complain  of  excessive  banking  house  Investment 25 

Charging  estate  of  associaton  by  executory  contract 157 

Claim  rejected  by,  creditor  may  sue  association  for 164 

Comptroller  to  appoint  if  reserve  short  not  made  good 106 

Comptroller  may  appoint  though  association  in  liquidation 151 

Comptroller  may  remove  at  pleasure 155 

Court  of  equity  may  appoint  and  enforce  individual  liability 155 

Counsel  for  and  authority  to  dismiss 160 

Creditor  forfeiture  of  right  to  interest 163 

Deficiency  of  surplus  $5,000,000  State  Bank  appointment  of 62 

Determining  shareholders  of  association 54 

Determining  liability  of  pledgee  of  stock 59 

Disposition  of  assets  of  association 157 

Dutes  and  powers  of 157 

Effect  of  appointment  of 156 

Enforcing  directors'  personal  liability 170 

Enjoin  sale  of  property  for  tax  assessed  on  shares 147 

Expenses   of   appointment  by   Court   not   charged   to   shareholders' 

statutory  liability   155 

Federal  Courts'  jurisdiction  and  limitations 193 

How  property  to  cover  equity  paid  for 165 

Insolvent  association  suits  by  and  against 159 

Liability  on  stock  to  enforce 61,  154 

May  purchase  real  estate  to  protect  equity  involved 165 

New  York  Court  suit  against  shareholder  in  another  State 160 

No  power  to  pay  dividends 163 

Not  restricted  in  action  to  instructions  from  the  Comptroller 157 

Order  of  Court  necessary  to  make  sale  and  restrictions  under.  .157,  158 
Question  of  accounting  to  Court  requiring  action  over  ruling  Comp- 
troller     159 

Questioning  validity  of  appointment  of 156 

Recover  amount  paid  for  shares  illegally  purchased 122 

Responsible  for  assets  of  association 161 

Successive  assessments  may  enforce 63 

Suit  against  Director  for  mismanagement 161 

Suits  to  recover  illegal  dividends  paid 118 

Suits  removable  to  Federal  Courts 160 

Surrendering  to  shareholder's  agent  balance  of  assets 167 

To  report  acts  to  Comptroller  of  Currency 156,  167 

Transfer  of  stock  to  avoid  liability  may  set  aside 60 

TJ.  S.  District-Attorney  acting  as  counsel  for,  no  extra  pay 150 

When  may  assign  right  of  action  and  assignee  enter  suit 63 

Rbceivebship — (See  also  Receiver). 

Action  of  replevin /  • :  V  «  '  * '  I  * '  ,*, ili 

Assets  of  insolvent  association  controlled  by  Comptroller xbd 

Authority  necessary  for  compounding  debts  of  insolvent  asso- 

elation     •. ,..«...••••••••••••.•  i&o 

Claims  and  Judgments,  interest  on 162 

Claims  due  the  U.  S.,  what  preference 163 

Claims  for  torts 1^^ 

Comptroller's  decision  of  insolvency  final 154 

Comptroller  to  notify  creditors  of  insolvent  association 161 

Creditor  obtaining  judgment,  cause  for 154 

Deposits  made  by  Savings  Bank  not  a  prior  lien 175 

Disposition  of  assets  after  pajnment  of  creditors 166 

Distribution  of  assets  in  dividends 162^ 


377 

PAGE. 

Receivership — Evidence  necessary  for  Comptroller  to  declare  Insolvent ISS- 

Expense  of  to  be  first  lien  on  assets 16& 

How  claims  established 162 

Independent  illegal  action  of  executive  ofllcer  not  ground  for.  .  169 

Injunction  upon  by  association,  procedure 164 

Preference  in  State  Statute  making  certain  deposits  prior  lien 

not  apply  to  insolvent  associations 175 

Presentment  of  paper  for  payment 15ft 

Recovery  of  deposits  made  after  insolvency  when  not  prefer- 
ence       173 

Renewals  of  bills  receivable,  original  notes  not  evidence  of  debt  173' 

Secured    creditors 163 

Set-off  by  Receiver  for  debtor,  what  and  what  not 174 

Statute  imposing  tax  if  property  gone  not  collectible 14T 

Statute  of  Limitation  not  apply  in  action  against  Directors. . . .  170 

Suits  of  rejected  claims 163 

Transfer  of  shares  in  contemplation  of  insolvency  void 171 

What  constitutes  a  preference  and  what  not 172 

When  franchises  forfeited 154 

When  transfers  prior  to  Insolvency,  not  held  as  preference.  . .  .  172 

Records  of  Association — How   kept 244 

List  of  shareholders,  shares  held  and  residence.  .  .  .  127 

Provision  for  In  by-laws 236 

Shareholders'  right  to  inspect 30 

Receiving  Teller — Position  of  and  duties 240 

Redemption  Fund— Association  to  keep  with  U.  S.  Treasurer 92,  93,  309 

Covered  into  general  cash  of  Treasury 94 

Five  per  cent,  to  count  as  lawful  reserve 92 

Redemption  Cities — (See  Reserve  Cities). 

Redemption  of  Circulation — At  own  counter 87,  92,  93 

Bond  sale  to  cover  circulation  of  failed  associa- 
tion      100 

Circulation    though    unsigned    or    forged    sig- 
natures      89 

Deposit  of  lawful  money,  association  in  liquida- 
tion to  make  to  redeem 97 

Disposition  of  circulation  redeemed  by  Treas- 
urer  102,  313 

Enjoining   the   Comptroller   action    for   alleged 

failure  to  redeem 164 

Expenses    of,    transportation    and    redemption, 

association  to  pay 101,  312 

Extended  associations    96 

Five  per  cent,  fund  for 93 

Fragments    312,  328 

Interest  on  bonds  withheld,  failure  to  redeem . .  85 

Issue  of  new  circulation  for  redemption. .  .314,  326 

Profit  on  circulation  not  presented 97 

Protest  of  circulation  If  not  redeemed 98 

Question  of  lawful  money  deposit  required ....  99 
Receivership  on  association  failure  to  redeem.  154 
Redeemed  fit  for  re-issue  returned  to  associa- 
tion   102 

Regulations  in  regard  to 

92,  93,  100,  101,  102,  309,  328 

Remittances  to  reimburse  Treasurer  U.  S 310 

Secretary  of  Treasury  to  determine  disposition 

of  notes  redeemed 102 

U.  S.  Notes 328 

Re-discounts — Authority  to  make 16 

Illegal  interest,  right  of  action Ill 

Not  borrowing  money 16 

Officers'  action  binding  if  habitual 16 

Usurious  Interest  of  paper  not  relieved  by 113 

Reduction  op  Capital — (See  also  Capital  Stock). 

Cancellation  of  delinquent  stock  unsold 33 

Form  of  resolution 320 

Procedure,  rights  of  shareholders,  restrictions,  etc.  .40,  41 

Shareholders  reducing  amount  of  proposed  increase. .  39 

Register  of  Treasury — Name  on  circulating  notes 86 

Registered  U.  S.  Bonds — (See  Bonds,  U.  S.). 

Regulation  of  Association — (See  National  Banking  Association). 

Reorganization — Ordering  circulation  before  time  of  taking  effect 264 

Question  of  vs.  extension  of  charter 263 

State  and  private  associations  as  National 223 

Stockholders  of  old  Bank  not  bound 264 

Replevin — Action  against  Receiver  for  property  not  strictly  of  association. . . .  173 

26 


378 

PAGE 

Bepobts — Annual  of  Comptroller  to  Congress 5 

Association  of  condition,  contents,  etc 127 

Care  in  making 243 

Circulation,  semi-annual  return  to  U.  S,  Treasurer 134 

Condition  of  association  to  be  published 127 

Examiner  to  Comptroller  of  association  failing  to  redeem  notes.  ...      99 

Examiner  on  condition  of  association 130 

Explanation  of  items,  reports  to  Comptroller 277,  289 

Failure  to  make  report  of  condition 85,  129 

False   entries   in 180,   181 

Form  of  reports  to  Comptroller 272,  288 

List  of  shareholders  to  Comptroller .'  127 

Receiver  to  Comptroller 154 

Special  Comptroller  may  call  for 128 

Hesebve  Agknt — (See  also  Reserve  Cities). 

Association  may  keep  portion  of  reserve  with 107 

Cities  in  which  may  be  located 107,  108,  301 

Kesebve,  Lawful.  Money — (See  also  Reserve  Agent). 

Five  per  cent,  redemption  fund  to  count  as 92 

Funds  available  for 295 

Penalty  for  failure  to  maintain 106 

Proportion  of  with  reserve  agents 107 

Required    by    association 105 

Requirements,  computation,  examples,  etc 294,  295 

Requirement  of  gold   Banks 91 

Restriction  on  business  when  short 106 

Rbseevb  Cities — (See  also  Reserve  Agent). 

Additional  Comptroller  may  designate  and  how  become.  107,  109 

Application  to  become  to  be  made  to  Comptroller 107 

Classes    of 107,  108,  294 

Form  of  authority  to  sign  application  for  designation 323 

Form  of  application  for  designation 322 

Other  than  Central 107 

Provision  for  becoming  and  requirements 107,  108 

Residence — Association  required  to  keep  of  shareholders 127 

Of   association 104 

Of  shareholders  in  organization  certificate 9 

Requirement  of   Directors 44 

Resolution — Appointing  attorney  to  endorse  interest  checks 341 

Assuming  liabilities  of  association,  liquidating  to  consolidate....    254 

Authority  to  convert  State  Bank 228 

Change  of  title  and  transfer  of  bonds 321,  322 

Extension  of  corporate  existence 258,  259 

Liquidation    42,  247,  248 

Reorganization  of  State  or  private  Bank 223 

Reserve  cities  to  become 322,  323 

Shareholders'  reduction  of  capital  stock  and  form 40,  320 

Shareholders  to  increase  capital  and  form 36,  37,  319 

Withdrawal  of  bonds  on  deposit  with  Treasurer,  and  form... 82,  323 

Withdrawal  and  assignment  of  bonds  in  consolidation 254 

Retubns — (See  also  Circulation,  Reports,  Taxation). 

Association  failing  to  make  Comptroller  assess 135 

Default  of  State  Bank  on  circulation,  how  tax  estimated 137 

Required  of  circulation  of  State  Banks,  cities,  etc 136 

Semi-annual  for  tax  on  circulation 134 

Revised  Statutes  U.  S. — Index  of  Sections  of  Bank  Acts,  and  of  additional 

acts    25,  26 

s 

Sate  Deposit  Boxes — Of  National  Banks 12 

Sale — Bonds  of  failed  association  to  redeem  circulation 98 

Private  of  bonds  of  failed  association 101 

Shares  of  association  for  debt  pieviously  contracted 121 

Stock  of  delinquent  subscribers 33 

Stock  of  shareholders  not  assenting  to  extension  of  charter 74 

Savings  Department — Of  association,  how  operate 12 

JSeal — Association  aiRx  to  Certificate  of  Liquidation 152 

Association  may  adopt  and  provision  in  by-laws 9,  234 

Of  Comptroller  of  Currency 4 

OflScial  taking  acknowledgments  to  aflRx  on  organization  certificate 216 

Required  of  oflacer  taking  acknowledgment  of  report  of  condition 128 

Treasury  to  be  on  circulating  notes 86 

Secbetaby  of  State — Impression  and  certified  copy  seal  of  Comptroller  filed 

with    4 


379 

PAGE 

Secbetaby  of  Treasury — Appoint  Deputy  Comptroller  of  Currency 3 

Appoint  clerks  of  Comptroller  of  Currency 3 

Approve  seal  of  Comptroller  of  Currency 4 

Approve  destruction  of  plates  and  dies  of  circula- 
tion  when   useless 87 

Approve  appointment  of  Examiners  of  association.  .  130 
Approve  purchase  of  real  estate  by  Receiver  to  pro- 
tect equity   165 

Approve    payment    of    property    purchased    by    Re- 
ceiver      166 

Association  designated  Government  Depositaries  by  65 

Certifying  destruction,  worn  notes  redeemed 90 

Circulation  redeemed  to  determine  disposition  of .  .  .  102 

Circulation  redeemed  to  perpetuate  evidence  of .  .  .  .  102 
Comptroller  examination  of  association  to  concur  in 

on  failure  to  redeem  notes 99 

Concurrence    required    for    Comptroller    to    appoint 

Receiver     106 

Concurrence  with  Comptroller  to  designate  reserve 

cities    108 

Conversion  of  U.  S.  Bonds  into  2  per  cent,  bonds 

80,  81,  86 

Design  circulation  for  extended  association 97 

Exchange,  coupon  for  registered  bonds 80 

Fix  Examiners'  fees  in  certain  localities 130 

Fix  security   from   association   as   Government  De- 
positary and  financial  agent 66 

Notice   to   holders   of   circulating   notes   to   present 

shall   direct    100 

Obtain  appropriation  for  refund  of  excessive  tax.  . .  135 
Organization  with  capital  under  $100,000  to  be  ap- 
proved  by 28 

Prescribe  form  of  circulating  notes  of  association,  ,  .  .86 
Prescribe   printing   charter   number   on    circulating 

notes   87 

Prescribe  regulations  for  redemption  of  circulation.  136 

Recommend  for  position.  Comptroller  of  Currency.  .  2 

Supervise  printing  Comptroller's  annual  report....  6 

Supervision  of  and  assign  office  of  Comptroller 2 

To  approve  bond  of  Comptroller 2 

Secukity  for  Loans — Endorsement  charging  personal  estate 13,   26 

Mortgage  of  maker  of  note  to  endorser  as  collateral. ...  27 

Not  limited  to  personal  security 10,  13 

Policy  of  Bank  Act  as  to 28 

Real  estate  for  debts  previously  contracted 26 

Shares  of  own  association  not  to  be  taken 120 

Should  be  readily  convertible 242 

Stock  of  real  estate  company  collateral 27 

Semi-annuai.  Duty — (See  also  Taxation). 

Excess,  how  secure  refund 135 

How  collected  when  association  fails  to  pay 135 

Provision  for  on  circulation 133 

Regulations  for  assessment  and  payment 315 

Returns   for,   when 134 

Senate  of  U.  S. — Approve  appointment  of  Comptroller  of  Currency 2 

Set-off — Against  insolvent  association " 174 

Payor  of  Illegal  interest  not  apply  on  loan 112 

Rights  of,   etc 62 

Shareholder  creditor  not  apply  claim  as 62 

Shareholders — (See  also  Shares). 

Absolute  right  to  transfer  stock 31 

Action  of  not  necessary  to  close  association  on  expiration  of 

charter    251 

Agent  of.  Statute  as  to  embezzlement  applicable  to 184 

Agent  of,  suits  by  and  agninst 193 

Agent  of  for  insolvent  assorlation,  duties  and  powers. . .  .167,  168 

Agent  of  reappointed  in  case  of  resignation  or  death 168 

Assessable,  not  association  on  shares 139 

Assignee  liable  to  assessment 54 

Assessment  on,  for  deficiency  in  capital 125 

Assignment  of  stock  to  avoid  liability 54 

Assessment  when  debarred  by  Statute  of  Limitation 62 

Association  may  close 9 

Become  on  payment  of  subscription,  and  entry  of  name 31 

Books  of  association  admissible  evidence  to  recover  assess- 
ment     63 


380 

PAGB 

Shabeholders—  Cannot  prefer  creditor 60 

Cannot  question  validity  of  appointment  of  Receiver  by  Comp- 
troller        156 

Capital  increase  by,  and  right  to  new  stock 37,  38,  39,  213 

Comptroller  of  Currency  to  decide  when  prov.eed  against  and 

to  what  extent 61 

Consent  of,  in  State  Bank  converting 67,  227 

Consent  required  for  extension  of  charter 259 

Cumulative  voting  prohibited 43 

Creditor's  bill  against I54 

Debarred  claims,  when  association  in  liquidation   151 

Deceased  estate  liable 53,  64 

Delinquent  in  payment,  forfeiture  and  sale  of  shares 33,  124 

Directors,  election  or  appointment  by 10,  44,  50 

Disqualification  to  vote 44 

Dividends  of  liquidating  association,  property  of 152,  250 

Due  notice  required  of  meetings 43 

Enforcing  payment  of  installment 33 

Enforcement  assessment  in  court  of  equity  but  not  necessarily     61 
Enforcement  assessment  on  stock  not  lie  against  personally.  .    125 

Executor,  etc.,  holding  stock  when  not  personally  liable 64 

Extension  of  corporate  existence,  dissenting  from 262 

How  credited  for  payment  on  subscription 218 

How  enforce  right  to  inspect  books  of  association  In  liquida- 
tion      151 

Increase  of  capital  to  authorize 37 

Individual  liability  of,  and  enforcing 51,  52,  153 

Individually  cannot  bring  action  against  directors. 170 

Interest  in  stock  of  consolidating  association 255 

In  Virginia  not  deduct  indebtedness  from  value  of  stock  to 

be    assessed 144 

Jurisdiction  of  State  Court  in  action  against  Directors 194 

List  of,  association  to  keep  and  who  may  inspect 127 

List  of,  annually  transmitted  to  Comptroller 127 

Liable  until  transfer  of  stock  recorded 31 

Liable  for  principal  and  interest  of  debts 63 

Liability  as  pledgee 57 

Liable  though  stock  purchased  by  misrepresentation  of  oflB- 

cers    ••• ...•..••«••••■♦• •      64 

Liability  of  when  association  Insolvent  not  preferred  claim  on 

estate    •• ........•••      do 

Management  of  insolvent  association  after  payment  of  credi- 
tors  by   agent 166 

Married  women,  liability  as V,"  ",. 

May  appeal  to  Comptroller  for  appraisal  of  stock  In  dissent 

from  extension  of  charter 74 

May  reduce  amount  of  increase  determined  on 39 

May  leave  for  surplus  fund  shares  released  by  reduction....      41 

May  bring  suit  against  directors  if  Receiver  refuses 161 

Meetings,  how  provided  for  and  rights  In 42,  43 

Meetings,  when  not  legal *^ 

Meeting  to  vote  association  into  liquidation     101 

No  individual  liability  after  all  debts  paid. • . .  •      6d 

Non-resident  same  reduction  in  assessment  for  tax  as  resident  144 
Not  assenting  to  extension  of  charter,  may  withdraw  and  ob- 

tain  value  of  stock • •  •  •  •  •  •  •  •      '  * 

Not  liable  for  shares  as  collateral  held  In  name  of  another 

party    ' 

Notice  of' Impairment  of  capital,  form  of . •  • •  •    323 

Of   association   insolvent   may    dispose   of   property   to   satisfy 

Option  on  stock  Venders  liable  for  same • 56 

Organization  certificate  to  contain  names,  residence,  etc » 

Power  to  place  association  in  liquidation,  vote  necessary 150 

Procedure  against  on  stock,  in  voluntary  liquidation 64 

Property  assigned  after  association  insolvent o* 

Purchaser  of  shares  in  name  of  infant  liable ou 

Receiver  may  enforce  Individual  liability 10 « 

Receiving  dividends  not  contest  validity  of  liquidation 151 

Record  of  stock  necessary  to  recognize  holder <5W 

Registered    liable    unless    fault   of    association   not    recording 

transfer    •  •  •  • ^4,  55,  56 

Relation  to  bad  debts  or  paper  charged  off. 4i 

Requirement  in  transfer  of  stock  to  avoid  liability o* 

Restriction  on  transfer  of  stock ,•  •  • ^} 

Right  to  full  value  stock  of  liquidating  association ^ol 


381 

PAOB 

Shareholders — Right  of  action  against,  only  on  decision  of  Comptroller 62 

Rights  of  in  liquidating  association  consolidating 254 

Rights  and  liabilities  of,  succeeding  owner  of  stock 29 

Sale  of  stock  for  assessment  unpaid 125 

Set-off  on  assessment  cannot  make  as  creditor 62 

Security  given  for  liability  inures  to  benefit  of  all  creditors. .  60 

Shares  as  collateral  no  liability  if  so  noted  in  registering.  ...  58 
Shares  pledged  association  sold  and  applied  on  debt<  cannot 

recorer    121 

Solvent  not  held  for  liability  of  insolvent 52,  53 

State  Bank  reorganizing,  payment  for  new  stock 224 

State  Bank  converting  may  retain  holding  in  another  Bank. .  67 

Stock  held  as  collateral,  when  liable 67 

Stock  released  by  reduction  absolute  property  of  pro  rata ....  41 

Subscriptions  to  increased  capital,  relation  to 38 

Successive  assessments  may  be  levied 63 

Sued  cannot  deny  legal  existence  of  association 61 

Surrendered  proportion  of  stock  on  reduction  of  capital 40 

Title  and  location,  change  by 70 

Vote  required  to  put  association  in  liquidation 72 

Vote  required  to  extend  charter.* 72 

Vote  required  to  reduce  capital  stock 40 

When  become  liable  on  increased  capital  stock 66 

When  both  transferror  and  transferee  liable 60 

When  may  compel  directors  to  declare  dividends 118 

When  not  liable  to  association  for  purchase  through  fraud. . .  60 
When  not  liable  on  stock  transferred  association   failing  or 

failed   60 

When  receive  dividends  on  assets  of  insolvent  association.      .  162 

When  released  from  liability  on  circulating  notes 98 

When  relieved  of  liability  in  transfer  of  stock 54,  55 

When  right  to  stock  in  association  succeeding  another 74 

When  transfer  not  relieve  liability 59 

Shareholders'  Agent — Appointment  and  duties  of  insolvent  association 166 

Suits  by  and  against 193 

Shares — (See  also  Capital  Stock  and  Shareholders). 

Acquired  for  debt,  when  to  be  dii^osed  of 121 

Appraisal  and  sale  of,  for  shareholders  not  assenting  to  extension  of 

charter    74 

As  collateral  security,  how  holder  avoid  liability 57 

Assessment  of  for  deficiency  in  capital 125 

Assessment  on,  may  be  barred  by  Statute  of  Limitation 62 

Association  to  record  transfer  on  demand 32 

Association  not  hold  for  liability  of  shareholders 121 

Association  may  take  as  security  shares  of  another  association 122 

Association  liable  on  oflBcers'  statement  of  value 60 

Association  when  not  to  own  or  hold  own 121 

Attachable  for  indebtedness  by  association 121 

Certificates,  care  of 244 

Collateral  security  for  deposits 39 

Consolidating  association,  how  paid  for 255 

Converted  State  Banks  may  hold  of  other  Banks 67 

Delinquent,  forfeiture  and  sale 33 

Directors'   individual   liability  on 169 

Directors'  minimum  holding  required 44,  45 

Disposition  of  delinquent 33,  124 

Enforcing  individual   liability 33,  154 

Executor  liable  until  transfer  property  of  estate 64 

Execution  under  State  laws 30 

Force  of  record  of  transfer 30,  31 

Fractional  parts  may  be  issued 40 

Fraudulent  sale  not  benefit  creditors 61 

Held  in  representative  capacity,  stock  book  must  show,  to  avoid  per- 
sonal liability 63 

Illegal  holding  or  pledge  of  to  association 122 

Increased  of  association,  when  taxable 139 

Individual  liability  on 62 

Individual  liability  only  enforced  on  Comptroller's  decision 62 

Legal  status  before  payment  on 34 

Liability  for  damage,  refusal  to  transfer  stock 31 

Liability  in  favor  of  all  creditors 60 

Liability  of  subscriber 33 

Loans  on,  as  security  for,  prohibited 120 

Loss  of  certificate,  bond  of  indemnity  required 31 

Married  women  holding  liable 53 

Negotiability  of  In  liquidation,  character  of 152 


382 

FAQS 

Shakes — ^Number  held  by  each  shareholder,  association  to  keep  record  of 127 

Organization  certificate  to  state  number 9 

Original  shareholders,  right  to  increased  stock 38 

Par  value  and  denomination 29 

Par  value  of  stock  of  State  Banks  converted 29 

Payment  for  increased  stock 37 

Personal   property    29 

Personal  property  of  holder,  transfer  of 29 

Pledged  association  if  sold  and  applied  on  debt,  shareholders  cannot 

recover     121 

Purchaser  for  infant,  liable  for  assessment 60 

Reorganized  State  Bank  payment  for 224 

S£,le  of  shares  by  oflBcer  of  association  to  himself  or  to  association. . .  122 

Sale  to  give  control  of  association.  Court  not  approve 32 

Shareholders,  how  forfeit  right  of  pre-emption  to  increase 38 

Shareholders'  right  of  pre-emption  to  increase 38 

State  Bank  converted  to  National  may  remain  same 67 

State  cannot  limit  transfer  quality  of 29 

State  laws  on  trustee  holdings 29 

Stock  book  evidence  of  ownership 65 

Subscribers*  right  when  increase  not  approved  before  insolvency 38 

Subscribers'  right  when  total  increase  not  made 39 

Subscriptions  to  increased  stock 39 

Surirendered,  former  holder  no  claim  on  proceeds  collateral  charged 

off    41 

Taxable  as  personal  property  only 138,  139 

Taxation  of,  manner,  place  and  restrictions  on 138 

Taxation  of,  not  same  as  capital 139 

Temporary   certificates    205 

Territory  power  to  tax  same  as  States 145 

Transfer  of,  provision  for  in  by-laws 236 

Transfer,  record  of  legal  force 30 

Transfer,   right  of 29 

Transfer  to  avoid  liability 59 

Transfer   without   registration 32 

Vote  required  to  increase  capital 36 

What  determines  transfer  of  ownership 31 

When  Receiver  may  recover  for  illegal  purchase  of  by  association. . .  122 

When  title  passes  by  transfer 30 

Signatures—  Circulation,  printed  sufficient 89,  221 

Official  of  officers  required  by  Comptroller  and  form  of 214 

Officers'  on  circulating  notes 87,  88,  89,  221 

Of  Government  officers  printed  on  circulation 86 

Solicitor  of  Treasury — Construction  of  Statute  as  to  place  of  business 105 

U.  S.  District  Attorney  under  supervision  of  in  suits. 

United  States  a  party 196 

State  Banks  Converted — Assets  of  old  Bank,  what  take  over 68 

Assets  and  deposits  of  old  Bank,  relation  to  in  reor- 
ganizing      68,  223,  224 

Authority  from  State  not  necessary 67 

Capital  stock  of  in  conversion , 67,  226 

Certificate  of  capital  paid  in 230 

Certificates   of  stock 69,  231 

Charter  old  Bank,  when  expires 68 

Closing  affairs  of  old  Bank 67,  231 

Conversion  to   National,   procedure 35,  66,  226 

Conversion  of,  why  the  provision 67 

Converting  thereby  surrenders  State  charter 68 

Conversion  or  reorganization,  question  of 231 

Denomination   of   shares 29 

Directors,  majority  may  execute  papers 66 

Directors  may  continue  same 67,  68,  227 

Examination  of  assets 35,  227 

Execution  of  papers 229 

Incorporated  only  may  convert  to 66 

Loans    prohibited.    Comptroller    may    temporarily 

allow    120 

Relation  to  old  Bank 67,  231 

Returns  for  tax  on  circulation  of  State  Bank 137 

Shares  may  continue  same 67,  68,  227 

Shareholders'     meeting 228 

Shareholders'  liability.  State  Bank  capital  $5,000,- 

000    52 

Title  may  use,  old,  in  suits  of  old  Bank. . . : 69 

Vote  required  and  form  of 66,  67,  227,  228 

State  Banks — Circulation,  tax  on  and  returns 136,  137 

Comptroller  to  report  on  to  Congress 5 


383 

PAGS 

State  Courts — (See  also  Suits).  ,     .  ^  ^     ,. 

Against  Directors  for  violation  of  Bank  Act  may  be  brought 

in    170 

,  Embezzlement  of  officers  of  association 182 

Jurisdiction    V.%*  'H?'  ^ft^ 

Limitation  in  order  and  attachment Ill,  194,  195 

State  Taxation — (See  Taxation). 
Statute  of  Limitation — (See  Limitation). 

Stock  Account — When  payment  of  subscriptions  carried  to 21S 

Stocks  and  Bonds — As  security  for  debts 17 

Association    holding    of    another    association    can    plead 

ultra  vires  in  tax  assessment 24 

Dealing  in    1§ 

Of  another  association  not  legal  investment 17 

Real  estate  company's 2ft 

SUBSCRIBEB  to  Stock — Contract  to  pay  for 34r 

Entry  of  shareholders  and  full  payment  secures  rights 

without    certificate 31 

Execution  of  organization  certificate 21ft 

In  arrears  disqualifying  to  vote 44r 

Increased  capital,  when  liable 5ft 

Legal   status    33,  203 

Not  liable  for  through  fraud 60' 

Original  subscribers  to  distribute 34 

Payments     32,  33.  21S 

Recovering  amount  paid  in  on  insolvency  before  in- 
crease   approved 3& 

Rescinding  subscription    60,  204 

When   forfeit 33 

When  relieved  of  by  action  reducing  increase  deter- 
mined upon 39 

Subscription  Paper — Advantage  of  in  organizing  association 203 

Form  of 204 

Suits — (See  also  Crimes,  Penalty). 

Action  against  Directors  for  false  report 171 

Assignee  right  to  enter  when  liability  on  stock  fixed 63 

Association  power  to  sue  and  be  sued 10 

Comptroller  for  violation  of  Bank  Act 169 

Converted  State  Bank  may  prosecute  under  old  title 69 

Creditors  against  Directors,  remedy  cumulative  not  exclusive 171 

Creditors'  bill  against  shareholders 154 

Directors'  personal  liability    remedial  not  penal 170 

Enjoining  Comptroller  or  Receiv3r 164,  196 

Equity  to  enforce  liability  on  stock 64 

Evidence  of  instruments  certified  by  Comptroller 197,  19S 

For  usury,  who  may  bring 114 

Government  may  have  special  attorney 197 

Illegal  certifying  checks 185 

Injunction  against  collection  of  illegal  tax 147,  148 

Jurisdiction  of  by  and  against  association 191,  192 

Limitation  against  shareholders 62 

May  be  in  law  or  equity 61 

Receiver  by  and  against 159 

Receiver  or  shareholders  against  Director 161,  170 

Receiver  to  recover  illegal  dividends  paid 118 

Replevin   173 

Unauthorized  purchase  of  paper  not  defence 15 

U.  S.  District  Attorney  to  conduct  if  U.  S.  a  party 19ft 

Surety  Bonds — (See  Bonds,  Official). 

Surplus  Fund — Accumulation  of,  good  policy 243- 

Buying  notes  with 14 

Dividends  for  excess 37 

Excess  of  may  increase  capital 3'7' 

Increasing  when  increase  capital 39 

Receiver  may  be  appointed  for  deficiency 52 

Required  amount  before  oeclare  dividends , 117 

Taxation  of  (see  Taxation). 

When  may  be  taxed  separately  from  shares 142 

T 

Taxation — Actual  valuation  of  real  estate  in  fixing  value  of  shares 142 

Application  of  term  greater  rate  governing  assessment  of  shares,  . .  141 
Assessment  of  capital   of  association  as   personal   property  void   if 

shareholders   not   mentioned 139,  140 

Assessment  on  shares  may  be  collected  from  association 14ft- 


384 

PAGE 

Taxation — Assessment  only  in  name  of  shareholders 139 

Assessment  to  be  made  so  as  to  allow  for  deductioos 144 

Association  exempt  from  10  per  cent,  tax  on  circulation 138 

Associations  in  District  of  Columbia 129,  148 

Association  legally  liable  to  pay  for  shareholders  when 146 

Branch  oflSce  in  another  State  not  liable  for  tax 146 

Capital  stock  as  such  not  taxable  by  State 139 

Circulating  notes  of  association  only  as  money 146 

Deduction  in  assessment  for  portion  in  non-taxable  securities  not 

necessary    142 

Deduction  on  shares  same  as  on  other  moneyed  capital 143 

Deductions  allowed  other  moneyed  capital 144 

Exemption  of  stock  of  other  corporations  when  not  discrimination 

against  association 140,  141 

Exemption  of  certain  moneyed  capital  by  State  when  not  discrimi- 
nation   against    association 143 

Illegal,   remedy  for 147,  148 

Illegal  by  State  of  association 143 

Increased  stock,  when  taxable 139 

In  Indiana  real  estate  not  included  in  valuation  of  shares 142 

In  Indiana  real  estate  paid  on  in  valuation  of  shares  not  recoverable  142 
In  Kentucky  shares  subject  to  county  and  municipal   tax,   Hewitt 

law  not  govern 145 

Insolvent  association  property  gone,  shares  not  taxable 146,  147 

Intent  of  Bank  Act  States  should  tax  State  Banks  as  National 145 

In   Virginia  shareholders   not  deduct  indebtedness   from   value  of 

stock   144 

License,  association  not  subject  to 146 

Limit  of  tax  by  State  on  shares  of  association 139 

Meaning  of  moneyed  capital  as  governing  taxation  of  shares 140 

Non-resident  holders  taxable  where  Bank  located 139 

Not  at  greater  rate  than  other  moneyed  capital 139,  140,  141 

Of  association  must  conform  to  State  institutions 145 

Of  shares  to  be  equitable  under  State  constitution  as  other  moneyed 

capital    145 

On  other  competitive  corporations  of  State  not  to  be  discrimination 

against   association    145 

Personal  property  of  insolvent  association,  exempt 145 

Real  estate  assessable  separate  from  shares,  when 142 

"Real  estate  of  association  in  another  State 145 

"Real  property  of  association  same  rate  as  other  by  State 139 

Report  to  Comptroller  not  full  evidence  in  valuation  of  shares....  146 

Shareholders  not  association  assessable  on  shares 140 

Shares  assess  as  of  shareholder  not  of  association 139 

Shares  by  State  governed  by  employment  of  capital 140 

Shares  held  by  association  of  another 139 

Shares  in  proportion  to  rate  ol  moneyed  capital  not  necessarily  rate 

of  State  Banks 144,  145 

'.Shares  not  assessable  in  solido 140 

Shares  of  association,  manner  and  place  of  and  restriction 138 

Shares  of  association  not  liable  when  capital  of  State  Banks  taxed.  145 

Shares  of  association  as  personal  property 138,  139 

Shares  of  association.  State  legislation  to  determine  manner  of  and 

place  with  restriction 138 

Shares  of  association  distinguished  from  those  of  other  corporations 

for    , }il 

Shares  of  not  same  as  tax  on  capital 139 

State  Bank  while  converting  to  National  subject  to  assessment  by 

State    146 

State  laws  may  not  discriminate  against  associations 143 

State  may  require  list  of  shareholders  with  residence 147 

State  not  limited  in  tax  of  association  by  previous  limited  tax  on 

State   institutions 145 

State  on  shares  and  real  estate  of  association 138 

State  tax  on  circulating  notes  only  as  money 148 

Statute  relating  to • • 133,  138 

Surplus  fund  assessable  separately  from  shares  when 142 

Territories  may  tax  association  as  States 145 

TJ.  S.  Bonds  exempt  from 148 

Valuation  of  shares  of  association  for . . . 142 

Virtual  tax  on  shares  of  State  Banks  association  subject  to 145 

Taxes — (See  Semi-annual  Duty;  Taxation). 

Tklleb — (See  also  OflFicers).  „ 

Duties  defined  in  by-laws /••;•• ^^t 

Tebbttobibs — Banks  organized  under  laws  of,  not  issue  circulatlor 7& 

Laws  concerning  Banking ,      •» 


385 

PAOB 

Territobibs — Power  to  tax  association  as  State 145 

Rate  of  interest  governing  association 109 

Title — Association   reorganizing    263 

Association  to  be  approved  by  Comptroller 8,  205 

Change  of,  provisions  for 70,  71 

Form  of 206 

National  Bank  Act 1 

Reservation  of,  by  Comptroller,  time  allowed 207 

The  word  "  National  " 132 

Transfer  of  U  .S.  Bonds — (See  Assignment,  also  Bonds,  U.  S.). 

Transfxb  of  Sharks — After  Bank  insolvent,  inoperative 59 

Approval  of  Directors  not  necessary 31 

Bank  liable  for  refusal 32 

Certificates   as  evidence  of 56 

Directors  prescribe  regulations  for,  of  stock 31 

How  to  avoid  liability 54,  55,  59 

Made  as  in  other  corporations 30 

Owner  absolute  right  to  transfer 31 

Record   31 

Rights  of  holder  of  stock,  etc 30 

State  law  not  control 29 

TsEASTTSY  Drafts — Provision  for  endorsement  of 348 

Tbeasuree  of  U.  S. — Association  to  deposit  bonds  with  to  secure  charter 220 

Association  to  keep  redemption  fund  with 92 

Association  to  deposit  U.  S.  Bonds  before  chartered 79 

Certify  for  successive  tax  to  Comptroller  of  Treasury. . .  .    135 
Circulation  mutilated  and  worn,  to  deliver  Comptroller  for 

destruction     93 

Circulation  of  association,  to  redeem 95,   96 

Circulating  notes  to  redeem  on  deposit  of  lawful  money  95,  98 

Examination  of  bonds  deposited  with,  provision  for 83 

Interest  on  bonds  to  withhold  for  deficiency  in  capital. . . .    125 
Interest  on  bonds  to  withhold  for  failure  to  make  report..    129 

Name  on  circulating  notes 86 

Provision  for  destruction  of  notes  liquidating  association.      98 
Receiver  to  pay  to,  assets  collected  for  insolvent  associa- 
tion        157 

Redemption  fund  to  be  kept  with 92,   309 

Redemption  of  circulation  expenses,  how  paid 94 

Return  for  tax  on  circulation  to  be  made  to 134 

U.  S.  Bonds  of  association  for  circulation  to  hold  in  trust 

81,   85 
TBUSTEE — Administrator,  executor,  guardian  or  trustee  not  personally   liable 

for  stock  held  as 64 

Liability   for   assessment   until   personal   property   of   estate    trans- 
ferred          64 

May  act  with  shareholders  for  extension  of  charter 260 

May  act  with  shareholders  as  to  assets  of  liquidating  association. . . .    168 
Stock  held  as  must  be  so  noted  on  stock  book  to  avoid  personal  lia- 
bility          65 

u 

Ultra  Vibes — Bank  offering  fire  insurance  to  secure  customers 21 

Guarantee  of  paper 19 

Of   association 22 

When  not  enf orcible 22 

Undivided  Pbofits — What  constitutes 124 

USUBY — ^Actual  pajrment  of,  liability 114 

Actual  payment  of  required  to  enforce  penalty  for  double  amount 113 

Allegations,  when  sufllcient 113 

Amount   of   penalty 114 

Association  succeeding  private  Bank  liable  for  on  obligations  of  latter  116 

Association  liable,  though  mortgage  security  in  name  of  individual ...  24 

Association  may  not  plead Ill,  113 

Construction  of  Statute 117 

Discounting  note  with  provision  to  pay  attorney  fee 113 

Effect  on  contract 115,  116 

Equalizing  interest  on  difTerent  items  not  constitute 110 

Federal  law  governs  though  security  In  name  of  individual 116 

Forfeiture,  not  waive  by  separate  note  for 117 

Illegal  interest  included  in  paper  renewed  not  recoverable 113 

Inhibition  general  whether  persons  natural  or  artificial Ill 

Intent  of  the  law 112 

Interest  after  maturity 112,  113 

Interest  forfeited   112 

Knowledge  of  necessary  to  liability 113 

Limitation  for  enforcing .114,  115 


386 

PAGE 

USTJET — ^Loans  to  Directors,  association  liable  for 117 

Payor  not  plead  as  set-off  against  principal 112 

Payor  to  bring  special  action  for 112 

Penalty  of  association  receiving Ill,  113 

Period  included  in  limitation  to  recover 114 

Purchase  of  draft  at  illegal  rate HI 

Remedy  where  action  by  association 112 

Renewal  notes   113 

Right  of  action,  when  accrues 114^  115 

Rule  di  minimis '  117 

State  Courts,  jurisdiction  of [[  116 

State  laws  not  apply Hg 

Waiver    II7 

Who  may  bring  action II5 

U.  S.  Bonds — (See  Bonds,  U.  S.). 

U.  S.  DEPOSITARIES — (See  Government  Depositaries). 

U.  S.  Disbursing  Officer^ (See  Government  Depositaries). 

U.  S.  District  Attorney — No  extra  pay  acting  for  Receiver 160 

Suit  if  U.  S.  a  party  to  conduct 196 

U.  S.  Notes — Coins,  etc.,  issue  and  redemption  of 326 

U.  S.  Obligations — Defined 185 

National  Bank  circulation  included 185 

V 

Vice-President — (See  also  Officers  of  Association). 

No  implied  authority  to  borrow  money 16 

Office  of    239 

Prohibited  signing  report  of  condition 128 

Signature  may  attest  circulating  notes. 87,  88 

Visitorial  Powers — Limitation  to  association 132 

Voluntary  Liquidation — (See  Liquidation). 

Voting — Capital  to  increase 36 

Capital   to  reduce 40 

Changing  of  name  or  location 70 

Cumulative  not  allowed 43 

Extension  of  charter 72 

Liquidation    of    association 97 

Proxies  at  shareholders'  meetin'?,  who  not  permitted 43 

Restore  impaired  capital 125 

Shareholders'  agent  in  liquidation 166 

State  Bank  of  Shareholders  to  convert  to  National 66 

w 

Willful  Misapplication — (See  also  Crimes).  ^^^ 

Defined    178 

Women — Married,  as  corporators 202 

Married,  liable  as  shareholders 53 

Married  or  unmarried,  as  directors 45 

Married,  purchase  of  stock  by 53 

World's  Fair — Provision  for  Branch  Banks  at "« 


To  Bankers 


We  invite  correspondence  with  bankers  having 
interests  in  "Washington  requiring  attention,  es- 
pecially any  who  contemplate  entering  the  National 
Banking  System.  We  make  no  charge  for  furnishing 
information  on  the  subject,  or  for  examining  and 
filing   organization   papers    w^ith   the    Comptroller. 

For  over  thirty  years  we  have  acted  as  agents 
and  attorneys  for  National  Banks  before  the 
Treasury  Department,  under  the  provisions  of  the 
Bank  Act ;  examining  and  counting  the  worn  and 
mutilated  currency  redeemed  at  the  Treasury  for 
the  banks  w^e  represent,  witnessing  and  certifying 
to  its  destruction ;  also  examining  and  certifying 
as  to  the  United  States  bonds  of  the  banks  on 
deposit   with   the   Treasurer  of  the    United    States. 

We  deposit  lawful  money  to  retire  outstanding 
circulation  of  National  Banks  wishing  to  reduce 
circulation  or  to  go  into  voluntary  liquidation, 
and  also  withdra^v  and  sell  bonds  held  as  secur- 
ity therefor. 

We  are  in  position  to  buy  and  sell  Govern- 
ment bonds  at  best  market  rates,  and  have  also 
every  facility  for  the  collection  of  claims  in  all 
of  the   Departments  of  the    Government. 

A.  S.  PRATT  &  SONS, 

Corcoran  Building,  Opposite  Treasury  Department, 

WASHINGTON,  D.  C. 


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